New Clause 288

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

Alert me about debates like this

Justification of distribution by reference to relevant accounts

‘(1) Whether a distribution may be made by a company without contravening this Part, and the amount of a distribution that may be so made, is determined by reference to the following items as stated in the relevant accounts—

(a) profits, losses, assets and liabilities;

(b) provisions of the following kinds—

(i) where the relevant accounts are Companies Act accounts, provisions of a kind specified for the purposes of this subsection by regulations under section 378;

(ii) where the relevant accounts are IAS accounts, provisions of any kind;

(c) share capital and reserves (including undistributable reserves).

(2) The relevant accounts are the company’s last annual accounts, except that—

(a) where the distribution would be found to contravene this Part by reference to the company’s last annual accounts, it may be justified by reference to interim accounts, and

(b) where the distribution is proposed to be declared during the company’s first accounting reference period, or before any accounts have been circulated in respect of that period, it may be justified by reference to initial accounts.

(3) The requirements of—

section (Requirements where last annual accounts used) (as regards the company’s last annual accounts),

section (Requirements where interim accounts used) (as regards interim accounts), and

section (Requirements where initial accounts used) (as regards initial accounts),

must be complied with, as and where applicable.

(4) If any applicable requirement of those sections is not complied with, the accounts may not be relied on for the purposes of this Part and the distribution is accordingly treated as contravening this Part.’.—[Margaret Hodge.]

Brought up, and added to the Bill.