CHAPTER 2J
-
TRANSACTIONS AFFECTING SHARE CAPITAL
Note: This Chapter is modified for CCIVs: see Division
2
of Part
8B.4
.
History
Ch 2J amended by No 8 of 2022, s 3, Sch 2[101] (effective 1 July 2022).
PART 2J.1
-
SHARE CAPITAL REDUCTIONS AND SHARE BUY-BACKS
SECTION 256A
256A
PURPOSE
This Part states the rules to be followed by a company for reductions in share capital and for share buy-backs. The rules are designed to protect the interests of shareholders and creditors by:
(a)
addressing the risk of these transactions leading to the company's insolvency
(b)
seeking to ensure fairness between the company's shareholders
(c)
requiring the company to disclose all material information.
Division 1
-
Reductions in share capital not otherwise authorised by law
Note: This Division does not apply to a CCIV: see subsection
1231A(5)
.
History
Div 1 amended by No 8 of 2022, s 3, Sch 2[102] (effective 1 July 2022).
SECTION 256B
COMPANY MAY MAKE REDUCTION NOT OTHERWISE AUTHORISED
256B(1)
A company may reduce its share capital in a way that is not otherwise authorised by law if the reduction:
(a)
is fair and reasonable to the company
'
s shareholders as a whole; and
(b)
does not materially prejudice the company
'
s ability to pay its creditors; and
(c)
is approved by shareholders under section
256C
.
A cancellation of a share for no consideration is a reduction of share capital, but paragraph (b) does not apply to this kind of reduction.
Note 1: One of the ways in which a company might reduce its share capital is cancelling uncalled capital.
Note 2: Sections
258A
-
258F
deal with some of the other situations in which reductions of share capital are authorised. Subsection
254K(2)
authorises capital reductions involved in the redemption of redeemable preference shares and subsection
257A(2)
authorises reductions involved in share buy-backs.
Note 3: For a director
'
s duty to prevent insolvent trading on reductions of share capital, see section
588G
.
Note 4: For the criminal liability of a person dishonestly involved in a contravention of subsection
256D(1)
based on this subsection, see subsection
256D(4)
. Section
79
defines
involved
.
Note 5: A company may reduce its share capital for the purposes of the conversion and write-off provisions determined by APRA despite this Division (see Subdivision B of Division 1A of Part II of the
Banking Act 1959
, Division 2 of Part IIIA of the
Insurance Act 1973
and Division 1A of Part 10A of the
Life Insurance Act 1995
).
History
S 256B(1) amended by No 10 of 2018, s 3, Sch 7[1] (effective 5 March 2018).
S 256B(1) amended by No 180 of 2012, s 3, Sch 1[9].
[
CCH Note:
Act No 180 of 2012, s 3, Sch 7[1] contained the following application provision (which was effective 11 December 2012):
Application of amendments made by this Act
The amendments made by this Act apply in relation to an act or omission by a body corporate occurring on or after the day this Act commences.
]
256B(1A)
To avoid doubt, a cancellation of a partly-paid share is taken to be for consideration.
History
S 256B(1A) inserted by No 132 of 2007, s 3, Sch 5
[
5].
256B(2)
The reduction is either an equal reduction or a selective reduction. The reduction is an
equal reduction
if:
(a)
it relates only to ordinary shares; and
(b)
it applies to each holder of ordinary shares in proportion to the number of ordinary shares they hold; and
(c)
the terms of the reduction are the same for each holder of ordinary shares.
Otherwise, the reduction is a
selective reduction
.
256B(3)
In applying subsection (2), ignore differences in the terms of the reduction that are:
(a)
attributable to the fact that shares have different accrued dividend entitlements; or
(b)
attributable to the fact that shares have different amounts unpaid on them; or
(c)
introduced solely to ensure that each shareholder is left with a whole number of shares.
SECTION 256C
SHAREHOLDER APPROVAL
Ordinary resolution required for equal reduction
256C(1)
If the reduction is an equal reduction, it must be approved by a resolution passed at a general meeting of the company.
Special shareholder approval for selective reduction
256C(2)
If the reduction is a selective reduction, it must be approved by either:
(a)
a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or
(b)
a resolution agreed to, at a general meeting, by all ordinary shareholders.
If the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled.
256C(3)
The company must lodge with ASIC a copy of any resolution under subsection
(2)
within 14 days after it is passed. The company must not make the reduction until 14 days after lodgment.
Note: A proprietary company may also have to notify certain particulars under Part
2C.2
.
[
CCH Note:
S 256C(3) will be amended by No 69 of 2020, s 3, Sch 1[572], by substituting
"
the Registrar
"
for
"
ASIC
"
, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
History
S 256C(3) (Note) inserted by No 24 of 2003, s 3, Sch 1
[
28].
Information to accompany the notice of meeting
256C(4)
The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision on how to vote on the resolution. However, the company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders.
Documents to be lodged with ASIC
256C(5)
Before the notice of the meeting is sent to shareholders, the company must lodge with ASIC a copy of:
(a)
the notice of the meeting; and
(b)
any document relating to the reduction that will accompany the notice of the meeting sent to shareholders.
[
CCH Note 1:
S 256C(5) will be amended by No 69 of 2020, s 3, Sch 1[573] and
[
574], by substituting
"
the Registrar
"
for
"
ASIC
"
in the heading and
"
the Registrar
"
for
"
ASIC
"
, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
[
CCH Note 2:
S 256C(6) will be inserted by No 69 of 2020, s 3, Sch 1
[
575] (effective 1 July 2026 or a day or days to be fixed by Proclamation). S 256C(6) will read:
256C(6)
Lodgement of a document with the Registrar under this section must meet any requirements of the data standards.]
SECTION 256D
CONSEQUENCES OF FAILING TO COMPLY WITH SECTION 256B
256D(1)
The company must not make the reduction unless it complies with subsection
256B(1)
.
256D(2)
If the company contravenes subsection (1):
(a)
the contravention does not affect the validity of the reduction or of any contract or transaction connected with it; and
(b)
the company is not guilty of an offence.
256D(3)
Any person who is involved in a company
'
s contravention of subsection (1) contravenes this subsection.
Note 1: Subsection (3) is a civil penalty provision (see section
1317E
).
Note 2: Section
79
definesinvolved
.
256D(4)
A person commits an offence if they are involved in a company
'
s contravention of subsection (1) and the involvement is dishonest.
History
S 256D(4) amended by No 180 of 2012, s 3, Sch 1[10] (effective 11 December 2012).
[
CCH Note:
Act No 180 of 2012, s 3, Sch 7[1] contained the following application provision (which was effective 11 December 2012):
Application of amendments made by this Act
The amendments made by this Act apply in relation to an act or omission by a body corporate occurring on or after the day this Act commences.
]
SECTION 256E
256E
SIGNPOSTS TO OTHER RELEVANT PROVISIONS
The following table lists other provisions of this Act that are relevant to reductions in share capital.
Other provisions relevant to reductions in share capital
|
1 |
section 588G |
liability of directors on insolvency
|
|
section 1317H |
Under the combined operation of these sections the directors may have to compensate the company if the company is, or becomes, insolvent when the company reduces its share capital. |
2 |
section 1324 |
injunctions to restrain contravention
|
|
|
Under this section the Court may grant an injunction against conduct that constitutes or would constitute a contravention of this Act. |
[
CCH Note:
There is no item 3 in the table to s 256E.
] |
4 |
Chapter 6CA |
continuous disclosure provisions
|
|
|
Under this Chapter a disclosing entity is required to disclose information about its securities that is material and not generally available. |
5 |
Chapter 2E |
benefits to related parties to be disclosed
|
|
|
Under this Chapter a financial benefit to a director or other related party that could adversely affect the interests of a public company's members as a whole must be approved at a general meeting before it can be given. |
6 |
section 125 |
provisions in constitution
|
|
|
This section deals with the way in which a company's constitution may restrict the exercise of the company's powers and the consequences of a failure to observe these restrictions. |
7 |
sections 246B-246G |
variation of class rights
|
|
|
These sections deal with the variation of rights attached to a class of shares. This variation may be governed by the provisions of the company's constitution. |
History
S 256E amended by No 122 of 2001, s 3, Sch 2
[
22] (effective 11 March 2002).
Division 2
-
Share buy-backs
Note: This Division does not apply to a CCIV: see subsection
1231C(6)
.
History
Div 2 amended by No 8 of 2022, s 3, Sch 2[103] (effective 1 July 2022).
SECTION 257A
257A
THE COMPANY'S POWER TO BUY BACK ITS OWN SHARES
A company may buy back its own shares if:
(a)
the buy-back does not materially prejudice the company's ability to pay its creditors; and
(b)
the company follows the procedures laid down in this Division.
Note 1: If a company has a constitution, it may include provisions in the constitution that preclude the company buying back its own shares or impose restrictions on the exercise of the company's power to buy back its own shares.
Note 2: A company may buy-back
[
sic
] redeemable preference shares and may do so on terms other than the terms on which they could be redeemed. For the redemption of redeemable preference shares, see sections 254J
-
254L.
SECTION 257B
BUY-BACK PROCEDURE
-
GENERAL
257B(1)
The following table specifies the steps required for, and the sections that apply to, the different types of buy-back.
Procedures
|
minimum holding
|
employee share
|
on-market
|
equal access scheme
|
selective buy-back
|
[
and sections applied
]
|
|
|
|
|
|
|
|
within 10/12 limit
|
over 10/12 limit
|
within 10/12 limit
|
over 10/12 limit
|
within 10/12 limit
|
over 10/12 limit
|
|
ordinary resolution
[
257C
]
|
- |
- |
yes |
- |
yes |
- |
yes |
- |
special/unanimous resolution
[
257D
]
|
- |
- |
- |
- |
- |
- |
- |
yes |
lodge offer documents with
ASIC
[
257E
]
|
- |
- |
- |
- |
- |
yes |
yes |
yes |
14 days notice
[
257F
]
|
- |
yes |
yes |
yes |
yes |
yes |
yes |
yes |
disclose relevant information when offer made
[
257G
]
|
- |
- |
- |
- |
- |
yes |
yes |
yes |
cancel shares
[
257H
]
|
yes |
yes |
yes |
yes |
yes |
yes |
yes |
yes |
notify cancellation to ASIC
[
254Y
]
|
yes |
yes |
yes |
yes |
yes |
yes |
yes |
yes |
Note: Subsections
(2)
and
(3)
of this section explain what an equal access scheme is. The 10/12 limit is the 10% in 12 months limit laid down in subsections
(4)
and
(5)
. Subsections
(6)
and
(7)
of this section explain what an on-market buy-back is. See section
9
for definitions of
minimum holding buy-back, employee share buy-back
and
selective buy-back
.
[
CCH Note:
S 257B(1) will be amended by No 69 of 2020, s 3, Sch 1[576], by substituting
"
the Registrar
"
for
"
ASIC
"
(wherever occurring) in the table, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
History
S 257B(1) amended by No 14 of 2022, s 3, Sch 4[12] and
[
13] (effective 1 October 2022).
Equal access scheme
257B(2)
An equal access scheme is a scheme that satisfies all the following conditions:
(a)
the offers under the scheme relate only to ordinary shares;
(b)
the offers are to be made to every person who holds ordinary shares to buy back the same percentage of their ordinary shares;
(c)
all of those persons have a reasonable opportunity to accept the offers made to them;
(d)
buy-back agreements are not entered into until a specified time for acceptances of offers has closed;
(e)
the terms of all the offers are the same.
257B(3)
In applying subsection
(2)
, ignore:
(a)
differences in consideration attributable to the fact that the offers relate to shares having different accrued dividend entitlements;
(b)
differences in consideration attributable to the fact that the offers relate to shares on which different amounts remain unpaid;
(c)
differences in the offers introduced solely to ensure that each shareholder is left with a whole number of shares.
10/12 limit
257B(4)
The 10/12 limit for a company proposing to make a buy-back is 10% of the smallest number, at any time during the last 12 months, of votes attaching to voting shares of the company.
Exceeding the 10/12 limit
257B(5)
A proposed buy-back would exceed the 10/12 limit if the number of votes attaching to:
(a)
all the voting shares in the company that have been bought back during the last 12 months; and
(b)
the voting shares that will be bought back if the proposed buy-back is made;
would exceed the 10/12 limit.
On-market buy-backs
257B(6)
A buy-back is an on-market buy-back if it results from an offer made by a listed corporation on a prescribed financial market in the ordinary course of trading on that market.
History
S 257B(6) amended by No 122 of 2001, s 3, Sch 1, Pt 2
[
349].
257B(7)
A buy-back by a company (whether listed or not) is also an on-market buy-back if it results from an offer made in the ordinary course of trading in a financial market outside Australia which ASIC declares in writing to be an approved overseas financial market for the purposes of this subsection. A buy-back by a listed company is an on-market buy-back under this subsection only if an offer to buy-back those shares is also made on a prescribed financial market at the same time.
History
S 257B(7) substituted by No 122 of 2001, s 3, Sch 1, Pt 2
[
350].
257B(8)
A declaration under subsection
(7)
may be subject to conditions. Notice of the making of the declaration must be published in the
Gazette
.
History
S 257B(8) amended by No 5 of 2011, s 3, Sch 1
[
27].
SECTION 257C
BUY-BACK PROCEDURE
-
SHAREHOLDER APPROVAL IF THE 10/12 LIMIT EXCEEDED
Ordinary resolution required
257C(1)
If section
257B
applies this section to a buy-back, the terms of the buy-back agreement must be approved before it is entered into by a resolution passed at a general meeting of the company, or the agreement must be conditional on such an approval.
Information to accompany the notice of meeting
257C(2)
The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision how to vote on the resolution. However, the company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders.
Documents to be lodged with the ASIC
257C(3)
Before the notice of the meeting is sent to shareholders, the company must lodge with ASIC a copy of:
(a)
the notice of the meeting; and
(b)
any document relating to the buy-back that will accompany the notice of the meeting sent to shareholders.
[
CCH Note 1:
S 257C(3) will be amended by No 69 of 2020, s 3, Sch 1[577] and
[
578], by substituting
"
Registrar
"
for
"
ASIC
"
in the heading and
"
the Registrar
"
for
"
ASIC
"
, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
[
CCH Note 2:
S 257C(4) will be inserted by No 69 of 2020, s 3, Sch 1
[
579] (effective 1 July 2026 or a day or days to be fixed by Proclamation). S 257C(4) will read:
257C(4)
The lodgement must meet any requirements of the data standards.]
SECTION 257D
BUY-BACK PROCEDURE
-
SPECIAL SHAREHOLDER APPROVAL FOR SELECTIVE BUY-BACK
Selective buy-back requires special or unanimous resolution
257D(1)
If section
257B
applies this section to a buy-back, the terms of the buy-back agreement must be approved before it is entered into by either:
(a)
a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person whose shares are proposed to be bought back or by their associates; or
(b)
a resolution agreed to, at a general meeting, by all ordinary shareholders;
or the agreement must be conditional on such an approval.
Information to accompany the notice of meeting
257D(2)
The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision how to vote on the resolution. However, the company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders.
Documents to be lodged with the ASIC
257D(3)
Before the notice of the meeting is sent to shareholders, the company must lodge with ASIC a copy of:
(a)
the notice of the meeting; and
(b)
any document relating to the buy-back that will accompany the notice of the meeting sent to shareholders.
[
CCH Note:
S 257D(3) will be amended by No 69 of 2020, s 3, Sch 1[580]
-
[
582], by substituting
"
Registrar
"
for
"
ASIC
"
in the heading,
"
the Registrar
"
for
"
ASIC
"
and inserting
"
The lodgement must meet any requirements of the data standards.
"
at the end of the subsection, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
257D(4)
ASIC may exempt a company from the operation of this section. The exemption:
(a)
must be in writing; and
(b)
must be granted before the buy-back agreement is entered into; and
(c)
may be granted subject to conditions.
SECTION 257E
257E
BUY-BACK PROCEDURE
-
LODGMENT OF OFFER DOCUMENTS WITH ASIC
[
CCH Note:
S 257E heading will be amended by No 69 of 2020, s 3, Sch 1[583], by substituting
"
THE REGISTRAR
"
for
"
ASIC
"
, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
If section
257B
applies this section to a buy-back, the company must lodge with ASIC, before the buy-back agreement is entered into, a copy of:
(a)
a document setting out the terms of the offer; and
(b)
any document that is to accompany the offer.
[
CCH Note:
S 257E will be amended by No 69 of 2020, s 3, Sch 1[584] and
[
585], by substituting
"
the Registrar
"
for
"
ASIC
"
and inserting
"
The lodgement must meet any requirements of the data standards.
"
at the end, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
SECTION 257F
NOTICE OF INTENDED BUY-BACK
257F(1)
If section
257B
applies this section to a buy-back, the company must satisfy the lodgment requirement in subsection (2) at least 14 days before:
(a)
if the buy-back agreement is conditional on the passing of a resolution under subsection
257C(1)
or
257D(1)
-
the resolution is passed; or
(b)
if it is not
-
the agreement is entered into.
257F(2)
The company satisfies the lodgment requirement when it lodges with ASIC:
(a)
documents under subsection
257C(3)
or
257D(3)
or section
257E
; or
(b)
a notice that the company intends to carry out the buy-back.
Note 1: A company that has to lodge documents under section
257C
,
257D
or
257E
needs to lodge a notice under paragraph (2)(b) of this section only if it wants for some reason to enter into the agreement or pass the resolution less than 14 days after lodging the section
257C
,
257D
or
257E
documents.
Note 2: The company may specify a buy-back under paragraph (2)(b) in any way. It may, for instance, choose to lodge a notice covering buy-backs to be carried out:
•
under a particular scheme; or
•
as part of particular on-market buy-back activity.
[
CCH Note:
S 257F(2) will be amended by No 69 of 2020, s 3, Sch 1[586] and
[
587], by substituting
"
the Registrar
"
for
"
ASIC
"
and inserting
"
The lodgement must meet any requirements of the data standards.
"
at the end of para (b) (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
SECTION 257G
257G
BUY-BACK PROCEDURE
-
DISCLOSURE OF RELEVANT INFORMATION WHEN OFFER MADE
If section 257B applies this section to a buy-back, the company must include with the offer to buy back shares a statement setting outall information known to the company that is material to the decision whether to accept the offer.
SECTION 257H
ACCEPTANCE OF OFFER AND TRANSFER OF SHARES TO THE COMPANY
Effect of acceptance of the buy-back offer on share rights
257H(1)
Once a company has entered into an agreement to buy back shares, all rights attaching to the shares are suspended. The suspension is lifted if the agreement is terminated.
Shares transferred to the company and cancelled
257H(2)
A company must not dispose of shares it buys back. An agreement entered into in contravention of this subsection is void.
History
S 257H(2) amended by No 122 of 2001, s 3, Sch 1, Pt 2
[
351].
257H(3)
Immediately after the registration of the transfer to the company of the shares bought back, the shares are cancelled.
Note: ASIC must be notified of the cancellation under section
254Y
.
[
CCH Note:
S 257H(3) will be amended by No 69 of 2020, s 3, Sch 1[588], by substituting
"
The Registrar
"
for
"
ASIC
"
in the note, (effective 1 July 2026 or a day or days to be fixed by Proclamation).]
[
CCH Note:
The next section is s 257J.]
SECTION 257J
257J
SIGNPOSTS TO OTHER RELEVANT PROVISIONS
The following table sets out other provisions of this Act that are relevant to buy-backs.
Other provisions relevant to buy-backs
|
|
provision
|
comment
|
1 |
section 588G |
liability of directors on insolvency
|
|
section 1317H |
The directors may have to compensate the company if the company is, or becomes, insolvent when the company enters into the buy-back agreement. |
2 |
section 1324 |
injunctions to restrain contravention
|
|
|
The Court may grant an injunction against conduct that constitutes, or would constitute, a contravention of this Act. |
[
CCH Note:
There is no item 3 in the table to s 257J.
] |
4 |
subsection 609(4) |
application of takeover provisions
|
|
section 611 (item 19 of the table) |
These sections deal with the application of Chapter 6 to buy-backs. |
5 |
section 259A |
consequences of failure to follow procedures
-
the company and the officers
|
|
|
If a company fails to follow the procedure in this Division, the company contravenes this section and the officers who are involved inthe contravention are liable to a civil penalty under Part 9.4B and may commit an offence. |
6 |
section 256D |
consequences of failure to follow procedures if reduction in share capital involved
-
the company and the officers
|
|
|
If the buy-back involves a reduction in share capital and the company fails to follow the procedures in this Division, the company contravenes this section and the officers who are involved in the contravention are liable to a civil penalty under Part 9.4B and may commit an offence. |
7 |
section 256D |
consequences of failure to follow procedures if reduction in share capital involved
-
the transaction
|
|
|
This section provides that a failure to follow the procedures for share capital reductions does not affect the validity of the buy-back transaction itself. |
8 |
Chapter 6CA |
continuous disclosure provisions
|
|
|
Under this Chapter a disclosing entity is required to disclose information about its securities that is material and not generally available. |
9 |
Chapter 2E |
benefits to related parties to be disclosed
|
|
|
Under this Chapter, a financial benefit to a director or other related party may need to be approved at a general meeting before it is given. |
10 |
section 125 |
provisions in constitution
|
|
|
This section deals with the way in which a company's constitution may restrict the exercise of the company's powers and the consequences of a failure to observe these restrictions. |
11 |
sections 246B-246G |
variation of class rights
|
|
|
These sections deal with the variation of rights attached to a class of shares. This variation may be governed by the provisions of a company's constitution. |
History
S 257J amended by No 122 of 2001, s 3, Sch 2
[
23] (effective 11 March 2002).
Division 3
-
Other share capital reductions
Note: This Division applies to a CCIV with modifications: see section
1231H
.
History
Div 3 amended by No 8 of 2022, s 3, Sch 2[104] (effective 1 July 2022).
SECTION 258A
258A
UNLIMITED COMPANIES
An unlimited company may reduce its share capital in any way.
SECTION 258B
RIGHT TO OCCUPY OR USE REAL PROPERTY
258B(1)
[
Shareholder's right to occupy or use]
If a company has a constitution, under it the company may grant to a shareholder, as a shareholder, a right to occupy or use real property that the company owns or holds under lease, whether the right is a lease or licence or a contractual right.
Note: Before the introduction of strata or unit titles systems, rights to occupy real property were sometimes based on a holding of shares in a company.
258B(2)
[
Transfer of interest in land]
A company may transfer to a person an interest in land in exchange for, or in satisfaction of, a right to occupy or use the land of the kind referred to in subsection (1).
Example: A person has a right to occupy an apartment in a block of units because they hold shares in a company. As part of converting the block of units to strata title, the person surrenders the shares in return for a transfer of strata title over the apartment. The capital reduction involved in the transfer is authorised under this subsection.
SECTION 258C
258C
BROKERAGE OR COMMISSION
A company may pay brokerage or commission to a person in respect of that person or another person agreeing to take up shares in the company.
SECTION 258D
258D
CANCELLATION OF FORFEITED SHARES
A company may, by resolution passed at a general meeting, cancel shares that have been forfeited under the terms on which the shares are on issue.
SECTION 258E
OTHER SHARE CANCELLATIONS
258E(1)
Any reduction in share capital involved in:
(a)
the redemption of redeemable preference shares out of the proceeds of a new issue of shares made for the purpose of the redemption (see section 254K); or
(b)
a company
'
s buying-back of its own shares under sections 257A to 257J if the shares are paid for out of share capital.
is authorised by this section.
258E(2)
A company may cancel shares returned to it under section 651C, 724(2), 737 or 738 and any reduction in the company
'
s share capital that is involved is authorised by this subsection.
258E(3)
Any reduction in a company
'
s share capital because of an order under section 1325A is authorised by this subsection.
SECTION 258F
REDUCTIONS BECAUSE OF LOST CAPITAL
258F(1)
[
Capital lost or not represented by available assets]
A company may reduce its share capital by cancelling any paid-up share capital that is lost or is not represented by available assets.
History
S 258F(1) (formerly s 258F) amended by No 66 of 2010, s 3, Sch 1, Pt 1
[
8] and
[
9] (effective 28 June 2010).
258F(2)
[
Exceptions]
This power does not apply if:
(a)
the company also cancels shares; or
(b)
the cancellation of paid-up share capital is inconsistent with the requirements of any accounting standard.
History
S 258F(2) inserted by No 66 of 2010, s 3, Sch 1, Pt 1
[
10] (effective 28 June 2010).
Division 4
-
Application of this Part to MCI mutual entities
History
Div 4 inserted by No 37 of 2019, s 3, Sch 2[7] (effective 6 April 2019).
SECTION 258G
APPLICATION OF THIS PART TO MCI MUTUAL ENTITIES
258G(1)
For the purposes of applying this Part to an MCI mutual entity, a reference (other than in section
258B
) to a shareholder of the entity is taken to include a non-shareholder mutual member of the entity.
258G(2)
For the purposes of applying Division
1
to an MCI mutual entity:
(a)
any reduction of the entity
'
s share capital that relates to MCIs is taken to be a selective reduction; and
(b)
the reference to all ordinary shareholders in paragraph
256C(2)(b)
is taken to be a reference to all members of the entity.
258G(3)
For the purposes of applying Division
2
to an MCI mutual entity:
(a)
any scheme to buy back MCIs is taken not to be an equal access scheme; and
(b)
subsections
257B(4)
and
(5)
(the 10/12 limit) have effect in relation to MCIs issued by a mutual entity as if each MCI were a voting share with one vote attached to it; and
(c)
the reference to all ordinary shareholders in paragraph
257D(1)(b)
is taken to be a reference to all members of the entity.
258G(4)
To avoid doubt, this section does not have the effect of treating a non-shareholder mutual member
'
s membership of an MCI mutual entity as a share.
History
S 258G inserted by No 37 of 2019, s 3, Sch 2[7] (effective 6 April 2019).