New Clause 229

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:45 pm on 20th July 2006.

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Treasury shares: maximum holdings

‘(1) Where a company has shares of only one class, the aggregate nominal value of shares held as treasury shares must not at any time exceed 10% of the nominal value of the issued share capital of the company at that time.

(2) Where the share capital of a company is divided into shares of different classes, the aggregate nominal value of the shares of any class held as treasury shares must not at any time exceed 10% of the nominal value of the issued share capital of the shares of that class at that time.

(3) If subsection (1) or (2) is contravened by a company, the company must dispose of or cancel the excess shares, in accordance with section (Treasury shares: disposal), before the end of the period of twelve months beginning with the date on which that contravention occurs.

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.

(4) Where a company purchases qualifying shares out of distributable profits in accordance with section (Treasury shares), a contravention by the company of subsection (1) or (2) above does not render the acquisition void under section (General rule against limited company acquiring its own shares) (general rule against limited company acquiring its own shares).’.—[Margaret Hodge.]

Brought up, and added to the Bill.