Key Benefits:
45. Legal nature and rights and powers attaching to shares
(1) A share in a company is movable property and is transferable in accordance with section 48.
(2) Subject to subsection (3), a share in a company confers on the holder-
(a) the right to one vote on a poll at a meeting of the company on any resolution;
(b) the right to an equal share in dividends authorised by the Board;
(c) the right to an equal share in the distribution of the surplus assets of the company.
(3) Subject to section 60, the rights specified in subsection (2) may be negated, altered, or added to by the constitution of the company or in accordance with the terms on which the share is issued under section or section 50, as the case may be.
46. Types of shares
(1) Subject to the constitution of the company, different classes of shares may be issued in a company.
(2) Without limiting subsection (1), shares in a company may-
(a) be redeemable within the meaning of section 72;
(b) confer preferential or limited rights to distributions of capital or income;
(c) confer special, limited, or conditional voting rights; or
(d) not confer voting rights.
47. No par value shares
(1) All shares created or issued after the commencement of this Act shall be shares of no par value.
(2) All shares issued prior to the commencement of this Act shall be deemed to be converted into shares of no par value but such conversion shall not affect the rights and liabilities attached to such shares and in particular, but without prejudice to the generality of this provision, such conversion shall not affect -
(a) any unpaid liability on such shares; or
(b) the rights of the holders thereof in respect of dividends, voting or repayment on winding up or a reduction of capital.
(3) Subsection (2) shall apply notwithstanding any statement in a share certificate relating to the shares that describes the shares by reference to a par value.
(4) On the commencement of this Act, the stated capital of a company which has issued shares prior to the commencement of this Act shall be the whole of the company’s called up issued share capital and its share premium account.
(5) Notwithstanding the provisions of subsection (1), the Registrar may, in exceptional circumstances where he is satisfied that a company registered under this Act is a wholly owned subsidiary of a company registered outside Botswana and that for the purposes of the company’s reporting obligations outside Botswana it is necessary for the company to be formed with shares carrying a par value, the Registrar may grant a dispensation from the provisions of subsection (1) and permit the issue of a class or classes of par value shares, on such terms and conditions as he may consider appropriate:
Provided that all the ordinary shares or all the preference shares shall consist of either one or the other, and any premiums received on any issue of shares shall be transferred into an account called a share premium account to which, together with the company’s nominal issued share capital, the provisions of section 59 relating to reduction of capital shall apply.
(6) Shares of par value issued under subsection (5) may, with the approval of the Registrar where the functional currency of the company is a foreign currency, be designated in that foreign currency, but shall otherwise be designated in the currency of Botswana.
48. Transferability of shares
(1) Subject to any limitation or restriction on the transfer of shares in the constitution, a share in a company is transferable.
(2) A share is transferred by entry in the share register in accordance with section 81.
(3) Subject to section 82, the executor of a deceased shareholder may transfer a share even though the executor is not a shareholder at the time of transfer.
49. Issue of shares on registration and amalgamation
(1) Upon the registration of the company under section 22, the company shall issue, to any person or persons named in the application for registration as a shareholder or shareholders, the number of shares specified in the application as being the number of shares to be issued to that person or those persons.
(2) Upon the issue of a certificate of amalgamation under section 227, the amalgamated company shall issue to any person entitled to a share or shares under the amalgamation proposal, the share or shares to which that person is entitled.
50. Issue of other shares
(1) Subject to this Act and the constitution of the company, the Board of a company may issue shares at any time, to any person, and in any number it considers appropriate.
(2) If the shares confer rights other than those set out in section 45(2), or impose any obligation on the holder, the Board shall, subject to-
(a) the prior approval of an ordinary resolution of shareholders (unless the constitution otherwise provides); and
(b) the requirements of section 104 (dealing with a variation of class rights), approve terms of issue which set out the rights and obligations attached to the shares.
(3) The terms of issue approved by the Board under subsection (2) -
(a) shall be consistent with the constitution of the company, and to the extent that they are not so consistent are invalid and of no effect; and
(b) are deemed to form part of the constitution and may be amended in accordance with section 43 subject to the requirements of section 104, providing for the variation of class rights.
(4) Within 10 working days of the issue of shares under this section, the company shall -
(a) give notice to the Registrar in the prescribed form of -
(i) the number of shares issued, and
(ii) the amount of the consideration for which the shares have been issued, or its value as determined by the Board under section 53 and 54; and
(iii) the amount of the company’s stated capital following the issue of the shares;
(b) deliver to the Registrar a copy of any terms of issue approved under subsection (2); and
(c) deliver to the Registrar together with the notice under paragraph (a) and the copy of any terms of issue under paragraph (b), a declaration made by any of the persons referred to in section 21(3) that the provisions of the Act in relation to the issue of shares have been complied with.
(5) If a company fails to comply with subsection (4)-
(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and
(b) every officer of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(1).
51. Alteration in number of shares
(1) A company may by ordinary resolution -
(a) subdivide its shares into shares of a smaller amount if the proportion between the amount paid, and the amount, if any, unpaid on each reduced share remains the same as it was in the case of the share from which the reduced share is derived; or
(b) consolidate and divide all of its shares into shares of a larger amount than its existing shares.
(2) Where shares are consolidated, the amount paid and any unpaid liability thereon, any fixed sum by way of dividend or repayment to which such shares are entitled, shall also be consolidated.
(3) Where a company has altered its share capital in a manner specified in subsection (1), it shall, within 10 working days, file a notice to that effect with the Registrar.
(4) A notice under subsection (3) shall include particulars with respect to the classes of shares affected.
52. Pre-emptive rights to new issues
(1) Subject to the constitution, where a company issues shares which rank equally with or prior to existing shares as to voting or distribution rights, those shares shall be offered to the holders of existing shares in a manner which would, if the offer were accepted, maintain the relative voting and distribution rights of those shareholders.
(2) An offer under subsection (1) shall remain open for acceptance for a reasonable time.
53. Consideration for issue of shares
(1) Before it issues any shares the Board shall-
(a) determine the amount of the consideration for which the shares shall be issued; and
(b) resolve that in its opinion the consideration is fair and reasonable to the company and to all existing shareholders.
(2) The consideration for which a share is issued may take any form and maybe cash, promissory notes, contracts for future services, real or personal property, or other securities of the company and maybe issued in part for cash and in part by way of some other form of consideration.
54. Shares not paid for in cash
(1) Shares shall be deemed not to have been paid for in cash except to the extent that the company has actually received cash in payment of the shares at the time of or subsequently to the agreement to issue the shares.
(2) Before shares are credited as fully or partly paid up other than for cash, the Board shall -
(a) determine the reasonable present cash value of the consideration; and
(b) resolve that, in its opinion, the present cash value of the consideration is -
(i) fair and reasonable to the company and to all existing shareholders, and
(ii) not less than the amount to be credited in respect of the shares.
(3) The directors who vote in favour of a resolution under subsection (2) shall sign a certificate -
(a) describing the consideration in sufficient detail to identify it; and
(b) stating -
(i) the present cash value of the consideration and the basis for assessing it,
(ii) that the present cash value of the consideration is fair and reasonable to the company and to all existing shareholders; and
(iii) that the present cash value of the consideration is not less than the amount to be credited in respect of the shares.
(4) The Board shall deliver a copy of a certificate that complies with subsection (3) to the Registrar for registration within 10 working days after it is given, and where the shares are issued to an officer or employee of the company or to any relative of such persons or to a corporation which is a related party of such persons, the certificate shall be entered in the Interests Register.
(5) For the purposes of this section, shares that are or are to be credited as paid up, whether wholly or partly, as part of an arrangement that involves the transfer of property or the provision of services and an exchange of cash or cheques or other negotiable instruments, whether simultaneously or not, shall be treated as paid up other than in cash to the value of the property or services.
(6) A director who fails to comply with subsection (3) of this section shall be guilty of an offence and liable to the penalty set out in section 492 (1).
(7) Nothing in this section applies to the issue of shares in a company on -
(a) the conversion of any convertible securities; or
(b) the exercise of any option to acquire shares in the company.
(8) If the Board of a company fails to comply with subsection (4), every officer of the company shall be guilty of an offence and liable to the penalty set out in section 492(1).
55. Calls on shares
(1) Where a call is made on a share or any other obligation attached to a share is performed by the shareholder, the company shall, within 10 working days of the call being made, give notice to the Registrar in the prescribed form of-
(a) the amount of the call or its value as determined by the Board under section 5(3); and
(b) the amount of the stated capital of the company following the making of the call.
(2) If a company fails to comply with subsection (1) -
(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and
(b) every director of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(1).
56. Consent to issue of shares
The issue by a company of a share that -
(a) increases the liability of a person to the company; or
(b) imposes a new liability on a person to the company, is void if that person or an agent of that person authorised in writing does not consent in writing to becoming the holder of the share before it is issued.
57. Time of issue of shares
A share is issued when the name of the holder is entered on the share register.
58. Board may authorise distributions to shareholders
(1) Before a distribution is made by a company to any shareholder, that distribution -
(a) shall be authorised by the Board under subsection (2); and
(b) shall, unless the constitution provides otherwise, be approved by the shareholders by ordinary resolution.
(2) The Board of a company may authorise a distribution at such time and of such amount as it considers appropriate, if it is satisfied that the company will, immediately after the distribution is made, satisfy the solvency test.
(3) The directors who vote in favour of a distribution shall sign a certificate stating that, in their opinion, the company will, immediately after the distribution, satisfy the solvency test.
(4) If after a distribution is authorised and before it is made, the Board ceases to be satisfied that the company will, immediately after the distribution is made, satisfy the solvency test, any distribution made by the company is deemed not to have been authorised.
(5) In applying the solvency test for the purpose of this section and section 63, "debts" includes fixed preferential returns on shares ranking ahead of those in respect of which a distribution is made, except where that fixed preferential return is expressed in the constitution as being subject to the power of the Board to authorise distributions.
(6) A director who fails to comply with subsection (3) of this section shall be guilty of an offence and liable to the penalty set out in section 493(2).
59. Reduction of stated capital
(1) Subject to subsection (3), a company may by special resolution reduce its stated capital to such amount as it considers appropriate.
(2) Public notice of a proposed reduction of a company’s stated capital shall be given not less than 30 days before the resolution to reduce stated capital is passed.
(3) Where a company has agreed in writing with a creditor of the company that it will not reduce its stated capital below a specified amount without the prior consent of the creditor, or unless specified conditions are satisfied at the time of the reduction, a resolution to reduce stated capital passed in breach of any such agreement is invalid and of no effect.
(4) A company shall not take any action to extinguish or reduce a liability in respect of an amount unpaid on a share or to reduce its stated capital for any purpose other than the purpose of declaring that its stated capital is reduced by an amount that is not represented by the value of its assets if there are reasonable grounds for believing that -
(a) the company is, or after the taking of such action, would be unable to pay its debts as they become due; or
(b) after the taking of such action the value of the company’s assets would be less than the value of its liabilities.
(5) Where a share is redeemed at the option of the shareholder under section 74 or on a fixed date under section 75, or the company purchases a share under section 100 and the Board is satisfied that as a consequence of the redemption or purchase, the company would but for this subsection fail to satisfy the solvency test, the Board shall resolve that the stated capital of the company shall be reduced by the amount by which the company would so fail to satisfy the solvency test and the resolution of the Board shall have effect notwithstanding subsections (1) to (3).
(6) A company which has reduced its stated capital shall, within 10 working days of the reduction, give notice of the reduction to the Registrar, specifying the amount of the reduction and the reduced amount of its stated capital.
(7) If a company fails to comply with subsection (2) or subsection (6) -
(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(2); and
(b) every officer of the company who is in default shall be guilty of an offence and liable to the penalty set out in section 493(2).
60. Dividends
(1) A dividend is a distribution other than a distribution to which sections 66 and 76 apply.
(2) The Board shall not authorise a dividend -
(a) in respect of some but not all the shares in a class; or
(b) of a greater amount in respect of some shares in a class than other shares in that class except where -
(i) the amount of the dividend is reduced in proportion to any liability attached to the shares under the constitution, or
(ii) a shareholder has agreed in writing to receive no dividend, or a lesser dividend than would otherwise be payable.
61. Shares in lieu of dividends
Subject to the constitution of the company, the Board may issue shares to any shareholders who have agreed to accept the issue of shares, wholly or partly, in lieu of a proposed dividend or proposed future dividends if -
(a) the right to receive shares, wholly or partly, in lieu of the proposed dividend or proposed future dividends has been offered to all shareholders of the same class on the same terms;
(b) in the event that all shareholders elect to receive the shares in lieu of the proposed dividend, the relative voting or distribution rights in relation to the shares would be maintained;
(c) the shareholders to whom the right is offered are afforded a reasonable opportunity of accepting it;
(d) the shares issued to each shareholder are issued on the same terms and subject to the same rights as the shares issued to all shareholders in that class who agree to receive the shares; and
(e) the provisions of section 50 are complied with by the Board.
62. Shareholder discounts
(1) The Board may resolve that the company offer shareholders discounts in respect of some or all of the goods sold or services provided by the company.
(2) The Board may approve a discount scheme under subsection (1) only if it has previously resolved that the proposed discounts are-
(a) fair and reasonable to the company and to all shareholders; and
(b) to be available to all shareholders or all shareholders of the same class on the same terms.
(3) A discount scheme may not be approved or continued by the Board unless it is satisfied on reasonable grounds that the company satisfies the solvency test.
(4) Subject to subsection (5), a discount accepted by a shareholder under a discount scheme approved under this section is not a distribution for the purposes of this Act.
(5) Where -
(a) a discount is accepted by a shareholder under a scheme approved or continued by the Board; and
(b) at the time the scheme was approved or the discount was offered, the Board ceased to be satisfied on reasonable grounds that the company would satisfy the solvency test, the provisions of section 63 shall apply in relation to the discount with such modifications as may be necessary as if the discount were a distribution that is deemed not to have been authorised.
63. Recovery of distributions
(1) A distribution made to a shareholder at a time when the company did not, immediately after the distribution, satisfy the solvency test may be recovered by the company from the shareholder unless -
(a) the shareholder received the distribution in good faith and without knowledge of the company’s failure to satisfy the solvency test;
(b) the shareholder has altered the shareholder’s position in reliance on the validity of the distribution; and
(c) it would be unfair to require repayment in full or at all.
(2) If, in relation to a distribution made to shareholders -
(a) the procedure set out in section 58 has not been followed; or
(b) reasonable grounds for believing that the company would satisfy the solvency test in accordance with section 58, section 74 or section 75, as the case may be, did not exist at the time the certificate was signed, a director who -
(i) failed to take reasonable steps to ensure the procedure was followed, or
(ii) signed the certificate, as the case may be, is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.
(3) If, by virtue of section 58(4) a distribution is deemed not to have been authorised, a director who -
(a) ceased after authorisation but before the making of the distribution to be satisfied on reasonable grounds for believing that the company would satisfy the solvency test immediately after the distribution is made; and
(b) failed to take reasonable steps to prevent the distribution being made, is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.
(4) If, by virtue of section 62(5), a distribution is deemed not to have been authorised, a director who failed to take reasonable steps to prevent the distribution being made is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.
(5) If, in an action brought against a director or shareholder under this section, the court is satisfied that the company could, by making a distribution of a lesser amount, have satisfied the solvency test, the court may -
(a) permit the shareholder to retain; or
(b) relieve the director from liability in respect of,
an amount equal to the value of any distribution that could properly have been made.
64. Reduction of shareholders liability
(1) If a company proposes to alter its constitution, or redeem shares under section 73 in a manner which would cancel or reduce the liability of a shareholder to the company in relation to a share held prior to that alteration, or redemption, the proposed cancellation or reduction of liability is to be treated -
(a) for the purposes of section 58 as if it were a distribution; and
(b) for the purposes of section 60(2) as if it were a dividend.
(2) If a company has altered its constitution, or redeemed shares under section 73 in a manner which cancels or reduces the liability of a shareholder to the company in relation to a share held prior to that alteration, or redemption, that cancellation or reduction of liability is to be treated for the purposes of section 63 as a distribution of the amount by which that liability was reduced.
(3) If the liability of a shareholder of an amalgamating company, to that company in relation to a share held before the amalgamation is -
(a) greater than the liability of that shareholder to the amalgamated company in relation to a share or shares into which that share is converted; or
(b) cancelled by the cancellation of that share in the amalgamation, the reduction of liability effected by the amalgamation is to be treated, for the purposes of section 63(1) and (3), as a distribution by the amalgamated company to that shareholder, whether or not that shareholder becomes a shareholder of the amalgamated company of the amount by which that liability was reduced.
(4) Where a company acquires shares issued by it, the provisions of section 67 shall govern the way in which the distribution to shareholders is to be treated.
65. Company may acquire or redeem its own shares
(1) A company shall not purchase or otherwise acquire any of its own shares except -
(a) under section 66;
(b) under sections 98 to 103;
(c) with the approval of a unanimous resolution;
(d) if the company is a private company, with the unanimous agreement of all shareholders under section 247; or
(e) in accordance with an order made by the court under this Act.
(2) A company shall not redeem a share which is a redeemable share except in accordance with sections 72 to 75.
(3) Within seven days following the acquisition or redemption of shares by the company, the company shall give notice to the Registrar of the number and class of shares acquired or redeemed.
(4) Where shares are acquired by a company pursuant to subsection (1) or redeemed pursuant to subsection (2), the stated capital of the class of shares so acquired or redeemed shall be decreased by an amount derived by multiplying the number of shares of that class so acquired with the amount arrived at so as to take into account the extent to which the company’s stated capital is reduced by the company’s acquisition or redemption of its own shares.
(5) A company shall not make any payment in whatever form to acquire or redeem any share issued by the company where there are reasonable grounds for believing that the company is or would after the payment, be unable to satisfy the solvency test.
(6) Shares in the capital of a company may not be acquired or redeemed if, as a result of such acquisition or redemption, there would no longer be any shares on issue other than convertible or redeemable shares.
(7) If a company fails to comply with subsection (3) or (4) -
(a) the company shall be guilty of an offence and liable, in the case of subsection (3), to the penalty set out in section 492(1) and in the case of subsection (4) to the penalty set out in section 492(3); and
(b) every officer of the company who is in default shall be guilty of an offence and liable, in the case of subsection (3), to the penalty set out in section 493(1) and in the case of subsection (4) to the penalty set out in section 493(2).
66. Purchase of own shares
(1) A company may with the approval of the Board and of an ordinary resolution of shareholders purchase or otherwise acquire its own shares:
Provided that the shares are fully paid up and its constitution does not forbid it from doing so.
(2) The approval pursuant to subsection (1) may be a general approval or a specific approval for a particular acquisition.
(3) If the approval under subsection (1) is a general approval, it shall be valid only until the next annual meeting or it may be revoked or varied by ordinary resolution by any general meeting of the company at any time prior to such annual meeting.
(4) Subject to subsection (10), before a company enters into any arrangement to purchase its own shares, the Board shall resolve that it is not aware of any information that has not been disclosed to shareholders which is material to an assessment of the value of the shares, and as a result of which the terms on which the shares are being acquired or the consideration to be provided for the shares are unfair to shareholders whose shares are to be acquired.
(5) Save as provided by subsections (10) and (11), a company that proposes to acquire shares that are issued by it shall -
(a) deliver or mail a copy of the written offer or circular to each shareholder on record as at the date of the offer in such manner as may be provided in the constitution of the company for sending any notice of meeting to shareholders, stating the number and class or kind of its issued shares which the company proposes to acquire, specifying the terms and reasons for the offer and providing the disclosure required by subsection (12); and
(b) file a copy of the offering circular with the Registrar within 15 days of the date that it is delivered or mailed to the shareholders of the company.
(6) The provisions of sections 313 to 315 shall apply so far as they reasonably extend to all documents issued in terms of subsection (5).
(7) Where in response to any offer to acquire shares, the shareholders propose to dispose of a greater number of shares than the company offered to acquire, the company shall acquire from all shareholders who offered to sell, pro rata as nearly as possible disregarding fractions:
Provided that this section shall not apply to the acquisition of shares in terms of transactions effected on a stock exchange within Botswana or to acquisition of shares by an investment company with variable capital.
(8) A company that acquires shares issued by it shall notify the Registrar within 30 days of the date of acquisition in the prescribed form of the date, number and class of shares that it has acquired.
(9) A stock exchange within Botswana may, in addition to any requirements contained in this Act, determine further requirements with which a company whose shares are listed on such exchange shall comply prior to such company acquiring its own shares.
(10) Subsections (4), (5) and (8) shall not apply to an investment company with variable capital which is licensed under the Collective Investment Undertakings Act.
(11) Subsection (5) shall not apply to-
(a) an offer which is made to all shareholders to acquire a proportion of their shares which, would if accepted, leave unaffected relative voting and distribution rights, and affords a reasonable opportunity to shareholders to accept the offer;
(b) an offer to which all shareholders have consented in writing;
(c) an offer made pursuant to a unanimous shareholder agreement under section 247;
(d) an offer made pursuant to an approval by unanimous resolution; or
(e) where the purchase or acquisition is made on a stock exchange in accordance with the rules of the stock exchange.
(12) The disclosure required for the purposes of subsection (5) is a document that sets out -
(a) the nature and terms of the offer, and if made to specified shareholders only, names of those shareholders;
(b) the nature and extent of any relevant interest of any director of the company in any shares the subject of the offer; and
(c) the text of the resolution required by subsection (4), together with such further information and explanation as may be necessary to enable a reasonable shareholder to understand the nature and implications for the company and its shareholders of the proposed acquisition.
67. Liability of directors and shareholders where solvency test not satisfied
(1) The directors of a company, who, contrary to the provisions of section 65(5), are party to allowing the company to acquire any share issued by it, shall be jointly and severally liable to restore to the company any amount so paid and not otherwise recovered by the company, subject to any relief granted by the court under section 517.
(2) A director who is liable under subsection (1) may apply to the court for an order directing any shareholder or former shareholder to pay, to the company, any money that was paid to such shareholder contrary to section 65(5).
(3) Where the acquisition by the company, of shares issued by it, is in contravention of the provisions of section 66(5), any creditor who was a creditor at the time of acquisition or any shareholder may apply to the court for an order and the company may, if it thinks it equitable to do so -
(a) order a shareholder or former shareholder to pay to the company any money or return any consideration that was paid or provided by the company to acquire the shares;
(b) order the company to issue an equivalent number of shares to the shareholder or former shareholder;
(c) make such order as it considers appropriate.
(4) A proceeding to enforce a liability imposed by this section shall be brought within three years after the date of completion of the acquisition.
(5) Nothing contained in this section shall limit or diminish any liability which any person may incur under this Act or any other law, or the common law.
(6) For the purposes of this section "director of a company" includes a director of a holding company of such company.
68. Cancellation of shares repurchased
(1) Subject to sections 69 and 70, shares that are acquired by a company pursuant to section 66 or section 100 are deemed cancelled immediately on acquisition.
(2) Shares are acquired for the purposes of subsection (1) on the date on which the company would, apart from this section, become entitled to exercise the rights attached to the shares.
(3) On the cancellation of a share under this section, the rights and privileges attached to that share expire; but the share may be reissued in accordance with this Part.
69. Company may hold its own shares
(1) Shares acquired by a company pursuant to section 66 or section 98 shall not be deemed cancelled under section 68(1) if -
(a) the constitution of the company expressly permits the company to hold its own shares;
(b) the Board of the company resolves that the shares concerned shall not be cancelled on acquisition; and
(c) the number of shares acquired, when aggregated with shares of the same class held by the company pursuant to this section at the time of the acquisition, does not exceed five per cent of the shares of that class previously issued by the company, excluding shares previously deemed to be cancelled under section 68(1).
(2) Shares acquired by a company pursuant to section 66 or section 98 that, pursuant to this section, are not deemed cancelled shall be held by the company in itself.
(3) A share that a company holds in itself under subsection (2) may be cancelled by the Board of the company resolving that the share is cancelled; and the share shall be deemed to be cancelled on the making of such a resolution.
(4) The rights and obligations attaching to a share that a company holds in itself pursuant to subsection (2) shall not be exercised by or against a company while it holds the share.
(5) Without limiting subsection (4), while a company holds a share in itself pursuant to this section, the company shall not -
(a) exercise any voting rights attaching to the share; or
(b) make or receive any distribution authorised or payable in respect of the share.
70. Reissue of shares company holds in itself
(1) Subject to subsection (2), section 53 shall apply to the transfer of a share held by a company in itself as if the transfer were the issue of the share under section 50.
(2) Subject to subsection (1), the transfer of a share by a company in itself shall not be subject to any provisions in this Act or the company’s constitution relating to the issue of shares, except to the extent the company’s constitution expressly applies those provisions.
(3) A company shall not grant an option to acquire a share it holds in itself or enter into any obligations to transfer such a share where the company has received notice in writing of a takeover scheme or, in the case of a listed company where the stock exchange makes a public notification to the share-market that a takeover offer for more than 20 per cent of the company’s shares is to be made.
71. Enforceability of contract to repurchase shares
(1) A contract with a company providing for the acquisition, by the company, of its shares is specifically enforceable against the company except to the extent that the company would, after performance of the contract fail to satisfy the solvency test.
(2) The company has the burden of proving that performance of the contract would result in the company being unable to satisfy the solvency test.
(3) Until the company has fully performed a contract referred to in subsection (1), the other party to the contract retains the status of a claimant entitled to be paid as soon as the company is lawfully able to do so or, prior to the removal of the company from the register of companies, to be ranked subordinate to the rights of creditors but in priority to the other shareholders.
72. Meaning of "redeemable"
For the purpose of this Act, unless the constitution of the company forbids the issue of redeemable shares, a share is redeemable -
(a) if the terms of the issue of the share, or where those terms of issue are contained in the constitution, the constitution makes provision for the redemption of the share -
(i) at the option of the company,
(ii) at the option of the holder of the share, or
(iii) on a date specified in the terms of the issue of the share or the constitution if the terms of issue are contained in the constitution; or
(b) for a consideration that is -
(i) specified,
(ii) to be calculated by reference to a formula, or
(iii) required to be fixed by a suitably qualified person who is not associated with or interested in the company.
73. Redemption at option of company
A redemption of a share at the option of the company is -
(a) an acquisition by the company of the share for the purposes of section 66(4) and (5); and
(b) a distribution for the purposes of section 57.
74. Redemption at option of shareholder
(1) Subject to this section, if a share is redeemable at the option of the holder of the share, and the holder gives proper notice to the company requiring the company to redeem the share-
(a) the company shall redeem the share on the date specified in the notice, or if no date is specified, on the date of receipt of the notice;
(b) the share is deemed to be cancelled on the date of redemption; and
(c) from the date of redemption the former shareholder ranks as an unsecured creditor of the company for the sum payable on redemption.
(2) A redemption under this section -
(a) is not a distribution for the purposes of section 58 and 60; and
(b) is deemed to be a distribution for the purposes of subsections (1) and (5) of section 63 of this Act.
75. Redemption on fixed date
(1) Subject to this section, if a share is redeemable on a specified date -
(a) the company shall redeem the share on that date;
(b) the share is deemed to be cancelled on that date; and
(c) from that date the former shareholder ranks as an unsecured creditor of the company for the sum payable on redemption.
(2) A redemption under this section -
(a) is not a distribution for the purposes of sections 58 and 60; and
(b) is deemed to be a distribution for the purposes of subsections (1) and (3) of section 63.
76. Restrictions on giving financial assistance
(1) A company shall not give financial assistance directly or indirectly to any person for the purpose of or in connection with the acquisition of its own shares, other than in accordance with this section.
(2) A company may give financial assistance for the purpose of, or in connection with, the acquisition of its own shares if the Board has previously resolved that -
(a) giving the assistance is in the interests of the company;
(b) the terms and conditions on which the assistance is given are fair and reasonable to the company and to any shareholders not receiving that assistance; and
(c) immediately after giving the assistance, the company will satisfy the solvency test.
(3) If the amount of any financial assistance approved under subsection (2) together with the amount of any other financial assistance given by the company which is still outstanding exceeds 10 per cent of the company’s stated capital, the company shall not give the assistance unless it first obtains from its auditor or, if it does not have an auditor, from a person qualified to act as its auditor, a certificate that -
(a) the person has inquired into the state of affairs of the company; and
(b) the person is not aware of anything to indicate that the opinion of the Board as to the matters in paragraph (b) of subsection (2) is unreasonable in all the circumstances.
(4) The amount of any financial assistance under this section is not a distribution for the purposes of section 58.
(5) For the purposes of this section, the term "financial assistance" includes giving a loan or guarantee, or the provision of security.
77. Transactions not prohibited by section 76
Section 76 shall not apply to -
(a) a distribution to a shareholder approved under section 58;
(b) the issue of shares by the company;
(c) a repurchase or redemption of shares by the company;
(d) anything done under a compromise under Part XV or a compromise or arrangement approved under Part XVI;
(e) a situation where the ordinary business of a company includes the lending of money by the company in the ordinary course of business.
78. Subsidiary may not hold shares in holding company
(1) Subject to this section, a subsidiary shall not hold shares in its holding company, and, subject to subsection (6), a transfer of shares in a holding company to its subsidiary shall be void and of no effect.
(2) Subject to subsection (6), an issue of shares by a holding company to its subsidiary shall be void and of no effect.
(3) Where a company that holds shares in another company becomes a subsidiary of that other company -
(a) the company may, notwithstanding subsection (1), continue to hold those shares; but
(b) the exercise of any voting rights attaching to those shares shall be of no effect.
(4) Nothing in this section prevents a subsidiary holding shares in its holding company in its capacity as a personal representative or a trustee unless the holding company or another subsidiary has a beneficial interest under the trust other than an interest that arises by way of security for the purposes of a transaction made in the ordinary course of the business of lending money.
(5) This section applies to a nominee for a subsidiary in the same way as it applies to the subsidiary.
(6) Notwithstanding the provisions of this section, a subsidiary company may, in accordance with sections 69 to 70 with any necessary adjustments, acquire shares in its holding company to a maximum of 10 per cent in the aggregate of the number of issued shares of the holding company:
Provided that this subsection shall not apply to the acquisition of shares by a holding company in its subsidiary.
79. Statement of rights to be given to shareholders
(1) Every company shall issue to a shareholder, on request, a statement that sets out-
(a) the class of shares held by the shareholder, the total number of shares of that class issued by the company, and the number of shares of that class held by the shareholder;
(b) the rights, privileges, conditions, and limitations, including restrictions on transfer, attaching to the shares held by the shareholder; and
(c) the relationship of the shares held by the shareholder to other classes of shares.
(2) The company is not obliged to provide a shareholder with a statement if-
(a) a statement has been provided within the previous six months;
(b) the shareholder has not acquired or disposed of shares since the previous statement was provided;
(c) the rights attached to shares of the company have not been altered since the previous statement was provided; and
(d) there are no special circumstances which would make it unreasonable for the company to refuse the request.
(3) The statement is not evidence of title to the shares or of any of the matters set out in it.
(4) The statement shall state in a prominent place that it is not evidence of title to the shares or of the matters set out in it.
(5) If a company fails to comply with subsection (1)-
(a) the company shall be guilty of an offence and liable to the penalty set out in section 492(1); and
(b) every director of the company shall be guilty of an offence and liable to the penalties set out in section 493(1).
