CHAPTER 2H
-
SHARES
PART 2H.2
-
REDEMPTION OF REDEEMABLE PREFERENCE SHARES
Note: This Part does not apply to a CCIV: see section
1230D
.
History
Pt 2H.2 amended by No 8 of 2022, s 3, Sch 2[96] (effective 1 July 2022).
SECTION 254J
REDEMPTION MUST BE IN ACCORDANCE WITH TERMS OF ISSUE
254J(1)
A company may redeem redeemable preference shares only on the terms on which they are on issue. On redemption, the shares are cancelled.
Note 1: For the power to issue redeemable preference shares see paragraph
254A(1)(b)
and subsections
254A(2)
and
(3)
.
Note 2: For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection
254L(3)
. Section
79
defines
involved
.
History
S 254J(1) amended by No 180 of 2012, s 3, Sch 1[4]
-
[
5] (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.
]
254J(2)
This section does not affect the terms on which redeemable preference shares may be cancelled under a reduction of capital or a share buy-back under Part
2J.1
.
SECTION 254K
254K
OTHER REQUIREMENTS ABOUT REDEMPTION
A company may only redeem redeemable preference shares:
(a)
if the shares are fully paid-up; and
(b)
out of profits or the proceeds of a new issue of shares made for the purpose of the redemption.
Note 1: For a director
'
s duty to prevent insolvent trading on redeeming redeemable preference shares, see section
588G
.
Note 2: For the criminal liability of a person dishonestly involved in a contravention of this section, see subsection
254L(3)
. Section
79
defines
involved
.
History
S 254K amended by No 180 of 2012, s 3, Sch 1[6]
-
[
7] (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 254L
CONSEQUENCES OF CONTRAVENING SECTION 254J OR 254K
254L(1)
[
Effect of contravention]
If a company redeems shares in contravention of section 254J or 254K:
(a)
the contravention does not affect the validity of the redemption or of any contract or transaction connected with it; and
(b)
the company is not guilty of an offence.
254L(2)
[
Person involved in contravention]
Any person who is involved in a company's contravention of section 254J or 254K contravenes this subsection.
Note 1: Subsection (2) is a civil penalty provision (see section 1317E).
Note 2: Section 79 defines
involved
.
254L(3)
[
Dishonest involvement]
A person commits an offence if they are involved in a company's contravention of section 254J or 254K and the involvement is dishonest.