• Shares held by or for a public company

    • 602. Duty to cancel shares in public company held by or for the company

      (1) This section applies in the case of a public company—
      (a) where shares in the company are forfeited, or surrendered to the company in lieu of forfeiture, in pursuance of the articles, for failure to pay any sum payable in respect of the shares,
      (b) where shares in the company are acquired by it (otherwise than in accordance with this Part or Part 28 (protection of members against unfair prejudice)) and the company has a beneficial interest in the shares,
      (c) where a nominee of the company acquires shares in the company from a third party without financial assistance being given directly or indirectly by the company and the company has a beneficial interest in the shares, or
      (d) where a person acquires shares in the company, with financial assistance given to him, directly or indirectly, by the company for the purpose of or in connection with the acquisition, and the company has a beneficial interest in the shares.
      (2) Unless the shares or any interest of the company in them are previously disposed of, the company must—
      (a) cancel the shares and diminish the amount of the company's share capital by the value of the shares cancelled, and
      (b) where the effect is that the value of the company's allotted share capital is brought below the authorised minimum, apply for re-registration as a private company, stating the effect of the cancellation.
      (3) It must do so no later than—
      (a) in a case within subsection 602(1)(a), three years from the date of the forfeiture or surrender,
      (b) in a case within subsection 602(1)(b) or (c), three years from the date of the acquisition,
      (c) in a case within subsection 602(1)(d), one year from the date of the acquisition.
      (4) The directors of the company may take any steps necessary to enable the company to comply with this section, and may do so without complying with the provisions of Chapter 8 of Part 16 (reduction of capital).

      See also section 604 (re-registration as private company in consequence of cancellation).
      (5) Neither the company nor, in a case within subsection 602(1)(c) or (d), the nominee or other shareholder may exercise any voting rights in respect of the shares.
      (6) Any purported exercise of those rights is void.

    • 603. Notice of cancellation of shares

      (1) Where a company cancels shares in order to comply with section 602, it must within 28 days after the shares are cancelled give notice to:
      (a) (in the case of a company other than a restricted scope company) the Registrar, or
      (b) (in the case of a restricted scope company) each of its members,
      specifying the shares cancelled.
      (2) The notice must be accompanied by a statement of capital.
      (3) The statement of capital must state with respect to the company's share capital immediately following the cancellation—
      (a) the total number of shares of the company,
      (b) the aggregate issue price of those shares,
      (c) for each class of shares—
      (i) prescribed particulars of the rights attached to the shares,
      (ii) the total number of shares of that class, and
      (iii) the aggregate issue price of shares of that class, and
      (d) the amount paid up and the amount (if any) unpaid on each share.
      (4) If default is made in complying with this section, A contravention of these Regulations is committed by—
      (a) the company, and
      (b) every officer of the company who is in default.
      (5) A person who commits a contravention under this section is liable to a level 2 fine.

    • 604. Re-registration as private company in consequence of cancellation

      (1) Where a company is obliged to re-register as a private company to comply with section 602, the directors may resolve that the company should be so re-registered.

      Chapter 3 of Part 3 (resolutions affecting a company's constitution) applies to any such resolution.
      (2) The resolution may make such changes—
      (a) in the company's name, and
      (b) in the company's articles,
      as are necessary in connection with its becoming a private company.
      (3) The application for re-registration must contain a statement of the company's proposed name on re-registration.
      (4) The application must be accompanied by—
      (a) a copy of the resolution (unless a copy has already been forwarded under Chapter 3 of Part 3),
      (b) a copy of the company's articles as amended by the resolution, and
      (c) a statement of compliance.
      (5) The statement of compliance required is a statement that the requirements of this section as to re-registration as a private company have been complied with.
      (6) The Registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a private company.

    • 605. Issue of certificate of incorporation on re-registration

      (1) If on an application under section 604 the Registrar is satisfied that the company is entitled to be re-registered as a private company, the company shall be reregistered accordingly.
      (2) The Registrar must issue a certificate of incorporation altered to meet the circumstances of the case.
      (3) The certificate must state that it is issued on re-registration and the date on which it is issued.
      (4) On the issue of the certificate—
      (a) the company by virtue of the issue of the certificate becomes a private company, and
      (b) the changes in the company's name and articles take effect.
      (5) The certificate is conclusive evidence that the requirements of these Regulations as to re-registration have been complied with.

    • 606. Effect of failure to re-register

      (1) If a public company that is required by section 602 to apply to be re-registered as a private company fails to do so before the end of the period specified in subsection (3) of that section, Chapter 1 of Part 19 (prohibition of public offers by private company) applies to it as if it were a private company.
      (2) Subject to that, the company continues to be treated as a public company until it is so re-registered.

    • 607. Offence in case of failure to cancel shares or re-register

      (1) This section applies where a company, when required to do by section 602
      (a) fails to cancel any shares, or
      (b) fails to make an application for re-registration as a private company,
      within the time specified in subsection (3) of that section.
      (2) A contravention of these Regulations is committed by—
      (a) the company, and
      (b) every officer of the company who is in default.
      (3) A person who commits a contravention under this section is liable to a fine of up to level 8.

    • 608. Application of provisions to company re-registering as public company

      (1) This section applies where, after shares in a private company—
      (a) are forfeited in pursuance of the company's articles or are surrendered to the company in lieu of forfeiture,
      (b) are acquired by the company (otherwise than by any of the methods permitted by this Part or Part 28 (protection of members against unfair prejudice)), the company having a beneficial interest in the shares,
      (c) are acquired by a nominee of the company from a third party without financial assistance being given directly or indirectly by the company, the company having a beneficial interest in the shares, or
      (d) are acquired by a person with financial assistance given to him, directly or indirectly, by the company for the purpose of or in connection with the acquisition, the company having a beneficial interest in the shares,
      the company is re-registered as a public company.
      (2) In that case the provisions of sections 602 to 607 apply to the company as if it had been a public company at the time of the forfeiture, surrender or acquisition, subject to the following modification.
      (3) The modification is that the period specified in section 602(3)(a), (b) or (c) (period for complying with obligations under that section) runs from the date of the re-registration of the company as a public company.

    • 609. Transfer to reserve on acquisition of shares by public company or nominee

      (1) Where—
      (a) a public company, or a nominee of a public company, acquires shares in the company, and
      (b) those shares are shown in a balance sheet of the company as an asset,
      an amount equal to the value of the shares must be transferred out of profits available for dividend to a reserve fund and is not then available for distribution.
      (2) Subsection (1) applies to an interest in shares as it applies to shares.

      As it so applies the reference to the value of the shares shall be read as a reference to the value to the company of its interest in the shares.