Clause 26

A payment made by a company in consideration of —

acquiring any right with respect to the purchase or acquisition of its own shares in accordance with section 76C, 76D, 76DA or 76E;

the variation of an agreement approved under section 76D or 76DA; or

the release of any of the company’s obligations with respect to the purchase or acquisition of any of its own shares under an agreement approved under section 76D or 76DA,may be made out of the company’s capital or profits so long as the company is solvent.(2) If the requirements in subsection (1) are not satisfied in relation to an agreement —

in a case within subsection (1)(a), no purchase or acquisition by the company of its own shares in pursuance of that agreement is lawful;

in a case within subsection (1)(b), no such purchase or acquisition following the variation is lawful; and

in a case within subsection (1)(c), the purported release is void.(3) Every director or manager of a company who approves or authorises, the purchase or acquisition of the company’s own shares or the release of obligations, knowing that the company is not solvent shall, without prejudice to any other liability, be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 3 years.(4) For the purposes of this section, a company is solvent if —

the company is able to pay its debts in full at the time of the payment referred to in subsection (1) and will be able to pay its debts as they fall due in the normal course of business during the period of 12 months immediately following the date of the payment; and

the value of the company’s assets is not less than the value of its liabilities (including contingent liabilities) and will not after the proposed purchase, acquisition or release, become less than the value of its liabilities (including contingent liabilities).(5) In determining, for the purposes of subsection (4), whether the value of a company’s assets is less than the value of its liabilities (including contingent liabilities), the directors or managers of a company —

must have regard to —

the most recent financial statements of the company that comply with section 201(1A), (3) and (3A), as the case may be; and

all other circumstances that the directors or managers know or ought to know affect, or may affect, the value of the company’s assets and the value of the company’s liabilities (including contingent liabilities); and

may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.(6) In determining, for the purposes of subsection (5), the value of a contingent liability, the directors or managers of a company may take into account —

the likelihood of the contingency occurring; and

any claim the company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability.Reduction of capital or profits or both on cancellation of repurchased shares76G. Where under section 76C, 76D, 76DA or 76E, shares of a company are purchased or acquired, and cancelled under section 76B(5), the company shall —

reduce the amount of its share capital where the shares were purchased or acquired out of the capital of the company;

reduce the amount of its profits where the shares were purchased or acquired out of the profits of the company; or

reduce the amount of its share capital and profits proportionately where the shares were purchased or acquired out of both the capital and the profits of the company,by the total amount of the purchase price paid by the company for the shares cancelled.Treasury shares76H.—

Where ordinary shares or stocks are purchased or otherwise acquired by a company in accordance with sections 76B to 76G, the company may —

hold the shares or stocks (or any of them); or

deal with any of them, at any time, in accordance with section 76K.(2) Where ordinary shares or stocks are held under subsection (1)(a) then, for the purposes of section 190 (Register and index of members), the company shall be entered in the register as the member holding those shares or stocks.Treasury shares: maximum holdings76I.—

Where a company has shares of only one class, the aggregate number of shares held as treasury shares shall not at any time exceed 10% of the total number of shares of the company at that time.(2) Where the share capital of a company is divided into shares of different classes, the aggregate number of the shares of any class held as treasury shares shall not at any time exceed 10% of the total number of the shares in that class at that time.(3) Where subsection (1) or (2) is contravened by a company, the company shall dispose of or cancel the excess shares, in accordance with section 76K before the end of the period of 6 months beginning with the day on which that contravention occurs, or such further period as the Registrar may allow.(4) In subsection (3), “the excess shares” means such number of the shares, held by the company as treasury shares at the time in question, as resulted in the limit being exceeded.Treasury shares: voting and other rights76J.—

This section shall apply to shares which are held by a company as treasury shares.(2) The company shall not exercise any right in respect of the treasury shares and any purported exercise of such a right is void.(3) The rights to which subsection (2) applies include any right to attend or vote at meetings (including meetings under section 210) and for the purposes of this Act, the company shall be treated as having no right to vote and the treasury shares shall be treated as having no voting rights.(4) No dividend may be paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made, to the company in respect of the treasury shares.(5) Nothing in this section is to be taken as preventing —

an allotment of shares as fully paid bonus shares in respect of the treasury shares; or

the subdivision or consolidation of any treasury share into treasury shares of a smaller amount, if the total value of the treasury shares after the subdivision or consolidation is the same as the total value of the treasury share before the subdivision or consolidation, as the case may be.(6) Any shares allotted as fully paid bonus shares in respect of the treasury shares shall be treated for the purposes of this Act as if they were purchased by the company at the time they were allotted, in circumstances in which section 76H applied.Treasury shares: disposal and cancellation76K.—

Where shares are held as treasury shares, a company may at any time —

sell the shares (or any of them) for cash;

transfer the shares (or any of them) for the purposes of or pursuant to an employees’ share scheme; (c)transfer the shares (or any of them) as consideration for the acquisition of shares in or assets of another company or assets of a person;

cancel the shares (or any of them); or

sell, transfer or otherwise use the treasury shares for such other purposes as the Minister may by order prescribe.(2) In subsection (1)(a), “cash”, in relation to a sale of shares by a company, means —

cash (including foreign currency) received by the company;

a cheque received by the company in good faith which the directors have no reason for suspecting will not be paid; (c)a release of a liability of the company for a liquidated sum; or

an undertaking to pay cash to the company on or before a date not more than 90 days after the date on which the company agrees to sell the shares.(3) But if the company receives a notice under section 215 (Power to acquire shares of shareholders dissenting from scheme or contract approved by 90% majority) that a person desires to acquire any of the shares, the company shall not, under subsection (1), sell or transfer the shares to which the notice relates except to that person.(4) The directors may take such steps as are requisite to enable the company to cancel its shares under subsection (1) without complying with section 78B (reduction of share capital by private company), 78C (reduction of share capital by public company) or 78I (Court order approving reduction).(5) Within 30 days of the cancellation or disposal of treasury shares in accordance with subsection (1), the directors of the company shall lodge with the Registrar the notice of the cancellation or disposal of treasury shares in the prescribed form with such particulars as may be required in the form, together with payment of the prescribed fee.”.