Public companies: general rule against lien or charge on own shares
‘(1) A lien or other charge of a public company on its own shares (whether taken expressly or otherwise) is void, except as permitted by this section.
(2) In the case of any description of company, a charge is permitted if the shares are not fully paid up and the charge is for an amount payable in respect of the shares.
(3) In the case of a company whose ordinary business—
(a) includes the lending of money, or
(b) consists of the provision of credit or the bailment (in Scotland, hiring) of goods under a hire purchase agreement, or both,
a charge is permitted (whether the shares are fully paid or not) if it arises in connection with a transaction entered into by the company in the ordinary course of that business.
(4) In the case of a company that has been re-registered as a public company, a charge is permitted if it was in existence immediately before the application for re-registration.’.—[Margaret Hodge.]