Companies Act (Cap. 386), article 115

115. (1) Where a company, duly authorised by its memorandum or articles, issues preference shares which are to b e redeemed or are liable to be red eemed at the option of the comp any or the shareholder - (a) no such shares shall be redeemed except out of the profits of the company which would otherwise be available for dividend o r, in accordance with sub- article (4), out of the proceeds of a fresh issue of shares made for the pur pose of the redemption; (b) no such shares shall be issued after 1st June 2003 unless the following condition s are satisfie d as regards the terms and manner of redemption - (i) the date on or by which, or dates between which, the shares are to be or may be redeemed must be specified in the company’s memorandum or articles or, if the memorandum or articles so provide, fixed by the directors, and in the latter case the date or dates must be fixed before the shares are issued; (ii) any other circumstances in which the shares are to be or may be redeemed must be specified in the company’s memorandum or articles; COMP ANIES [CAP. 386. 73 (iii) the amount payable on redemption must be specified in, or determined in accordance with, the company’s memorand um or articles, and in the latter case the memorandum or articles must not provide for the amount to be determined by reference to any person’s discretion or opinion; and (iv) any other terms and conditions of redemption shall be specified in the company’s memorandum or articles; (c) no such shares shall be redeemed unless they are fully paid up and the terms of redemption shall require full payment on redemption; (d) the premium, if any, payable on redemption shall have been provided for out of the profits of the company or out of the company’s share premium account before the shares are redeemed; (e) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits, which would otherwise have been available for distribution as dividend, be transferred to a reserve to be called "the capital redemption reserve", a sum equal to the nominal amount of the shares redeemed, and the provisions of this Act relating to the reduction of the issued share capital of a company shall, except as provided in this article, apply as if the capital redemption reserve were paid up share capital of the company. (2) The capital redemption reserve may, notwithstanding anything contained in this artic le, be applied by the company i n paying up unissued shares of the company to be issued to member s of the company as fully paid bonus shares. (3) Preference shares redeemed under this article shall be treated as cancelled on redemption, and the amount of the company’s issued share capital shall be diminished by the nomin al value of those shares accordingly: Provided that a redemption of preference shares by a company shall not to be taken as reducing the amount of the company’s authorised share capital. (4) Without prejudice to the provisions of sub-article (3), wher e a company is about to redeem pre ference shares, it shall have t he power to issue shares up to the nominal value of the preference shares to be redeemed as if those preference shares had never b een issued. (5) A notice of the redemption of preference shares referred to in the preceding sub-articles of this article sha ll be delivere d by the company to the Registrar for reg istration, within fourteen days after the date of redemption. (6) If default is made in complying with the provisions of sub- article (5) every officer of the company who is in default shal l be 74 CAP. 386.] COMP ANIES liable to a penalty, and, for every day during which the defaul t continues, to a further penalty. Rights of holders of special classes of shares and changes or variations thereof. Amended by: XXIV . 1995.362; L.N. 181 of 2006; L.N. 186 of 2006.