Companies Act 1992

Link to law: https://legislation.gov.im/cms/images/LEGISLATION/PRINCIPAL/1992/1992-0004/CompaniesAct1992_3.pdf
Published: 2015-11-01

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Companies Act 1992

c i e
AT 4 of 1992

COMPANIES ACT 1992

Companies Act 1992 Index


c AT 4 of 1992 Page 3

c i e
COMPANIES ACT 1992

Index Section Page

PART 1 – SHARE CAPITAL 7

Company mergers and reconstructions - share premium account 7

1 Preliminary provisions ................................................................................................... 7
2 Merger relief .................................................................................................................... 7
3 Relief from section 46 in respect of group reconstructions ....................................... 8
4 Provisions supplementary to sections 2 and 3............................................................ 9
5 Power to make provision extending or restricting relief from section 46 ............ 10
Financial assistance for acquisition of shares 10

6 Meaning of “financial assistance” .............................................................................. 10
7 Assistance for acquisition of shares in public company prohibited ...................... 11
7A Assistance by public company for acquisition of shares in its private
holding company prohibited ...................................................................................... 12
7B Prohibited financial assistance an offence ................................................................. 13
8 Unconditional exceptions ............................................................................................ 14
8A Conditional exceptions ................................................................................................ 14
Power of company to issue redeemable shares 15

9 Power of company to issue redeemable shares ........................................................ 15
Purchase by a company of its own shares 17

10 Power to purchase own shares ................................................................................... 17
11 Authority for off-market purchase ............................................................................. 17
12 Contingent purchase contracts ................................................................................... 19
13 Authority for market purchase ................................................................................... 20
14 Assignment or release of company’s right to purchase own shares ..................... 21
15 Payments apart from purchase price to be made out of distributable
profits.............................................................................................................................. 21
16 Disclosure of particulars of purchases and authorised contracts .......................... 22
Maintenance of capital on redemption or purchase of own shares

otherwise than out of capital 23

17 The capital redemption reserve fund ......................................................................... 23
Index Companies Act 1992


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Redemption or purchase of own shares out of capital 23

18 Power of private companies to redeem or purchase own shares out of
capital ............................................................................................................................. 23
19 Requirements for redemption or purchase out of capital: special resolution
approving payment ...................................................................................................... 25
20 Publicity for proposed payment out of capital ........................................................ 27
21 Objections by members or creditors .......................................................................... 28
22 Liability of past shareholders and directors ............................................................. 29
Miscellaneous and supplemental 30

23 Effect of company’s failure to redeem or purchase own shares ............................ 30
24 Power to alter certain provisions with respect to redemption or purchase
by a company of its own shares ................................................................................. 32
25 Interpretation of Part 1 ................................................................................................ 33
Treasury shares 33

25A Power to permit the holding of treasury shares ...................................................... 33
PART 2 – MISCELLANEOUS AND SUPPLEMENTAL 34

26 Power of the Court to require rectification of default ............................................. 34
27 [Repealed] ...................................................................................................................... 34
28 Transfer of securities .................................................................................................... 34
29 Names of public companies ........................................................................................ 36
30 Alternative designations ............................................................................................. 36
31 Public companies: amendment of certain requirements ........................................ 36
32 [Repealed] ...................................................................................................................... 37
33 Amendment of accounting requirements etc ........................................................... 37
34 Amendments ................................................................................................................. 37
35 Repeals ........................................................................................................................... 38
36 Short title and commencement ................................................................................... 38
SCHEDULE 1 39

AMENDMENTS RELATING TO THE COMPANIES REGISTRY 39
SCHEDULE 2 39

AMENDMENTS RELATING TO THE ADMINISTRATION OF COMPANIES 39
SCHEDULE 3 39

AMENDMENTS RELATING TO WRITTEN RESOLUTIONS OF PRIVATE
COMPANIES 39
SCHEDULE 4 39

AMENDMENTS RELATING TO EXEMPTIONS FOR PRIVATE COMPANIES
39
Companies Act 1992 Index


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SCHEDULE 5 39

AMENDMENTS RELATING TO CHARITABLE COMPANIES 39
SCHEDULE 6 39

MISCELLANEOUS AMENDMENTS 39
SCHEDULE 7 39

REPEALS 39
ENDNOTES 41

TABLE OF LEGISLATION HISTORY 41
TABLE OF RENUMBERED PROVISIONS 41
TABLE OF ENDNOTE REFERENCES 41

Companies Act 1992 Section 1


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c i e
COMPANIES ACT 1992

Received Royal Assent: 16 June 1992
Passed: 16 June 1992
Commenced: See endnotes
AN ACT
to make provision for merger relief, merger accounting; financial
assistance by a company for the acquisition of its own shares; the purchase by a
company of its own shares; to make further amendments to the Companies
Acts 1931 to 1986; and for connected purposes.
GENERAL NOTE:
The maximum fines in this Act are as increased by the Criminal
Justice (Penalties, Etc.) Act 1993 s 1.
PART 1 – SHARE CAPITAL

Company mergers and reconstructions - share premium account
1 Preliminary provisions

[P1981/62/36]
(1) Sections 2 and 3 give relief from the requirements of section 46 of the
Companies Act 1931 (in this Act referred to as “the 1931 Act
”) (premiums
on issue of shares to be transferred to a share premium account) in the
circumstances mentioned in this section.
(2) The relief given by sections 2 and 3 applies where a company issues
shares after the commencement of this section in circumstances to which
either of those sections applies.
(3) References in sections 2 and 3 to the issuing company are references to
the company issuing the shares as mentioned in subsection (2).
2 Merger relief

[P1981/62/37]
(1) Subject to section 3(5), this section applies where the issuing company
has secured at least a 90 per cent. equity holding in another company
Section 3 Companies Act 1992


Page 8 AT 4 of 1992 c

under any arrangement providing for the allotment of equity shares in
the issuing company on terms that the consideration for the shares
allotted is to be provided by the issue or transfer to the issuing company
of equity shares in that other company or by the cancellation of any such
shares not held by the issuing company.
(2) Where the equity shares in the issuing company allotted under the
arrangement in consideration for the acquisition or cancellation of equity
shares in the other company are issued at a premium, section 46 of the
1931 Act shall not apply to the premiums on those shares.
(3) Where the arrangement also provides for the allotment of any shares in
the issuing company on terms that the consideration for those shares is to
be provided by the issue or transfer to the issuing company of non-
equity shares in the other company or by the cancellation of any such
shares in that company not held by the issuing company, the relief from
section 46 provided by subsection (2) shall extend to any shares in the
issuing company allotted on those terms under the arrangement.
(4) Subject to subsection (5), the issuing company shall be regarded for the
purposes of this section as having secured at least a 90 per cent. equity
holding in another company under any such arrangement as is
mentioned in subsection (1) if in consequence of any acquisition or
cancellation of equity shares in that company under that arrangement it
holds equity shares in that company (whether all or any of those shares
were acquired under that arrangement or not) of an aggregate nominal
value equal to 90 per cent. or more of the nominal value of that
company’s equity share capital.
(5) Where the equity share capital of the other company in question is
divided into different classes of shares this section shall not apply unless
the requirements of subsection (1) are satisfied in relation to each of those
classes taken separately.
(6) Shares held by a company which is the issuing company’s holding
company or subsidiary or a subsidiary of the issuing company’s holding
company, or by its or their nominees, shall be regarded for the purposes
of this section as held by the issuing company.
(7) In this section “equity share capital” has the meaning given by section
1(5) of the Companies Act 1974; and, in relation to any company, “equity
shares” means shares comprised in that company’s equity share capital
and “non-equity shares” means shares in that company of any class not
so comprised.
3 Relief from section 46 in respect of group reconstructions

[P1981/62/38]
(1) This section applies where the issuing company —
Companies Act 1992 Section 4


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(a) is a wholly-owned subsidiary of another company (“the holding
company”); and
(b) allots shares to the holding company or to another wholly-owned
subsidiary of the holding company in consideration for the
transfer to it of shares in another subsidiary (whether wholly
owned or not) of the holding company.
(2) Where the shares in the issuing company allotted in consideration for the
transfer are issued at a premium, the issuing company shall not be
required by section 46 of the 1931 Act to transfer any amount in excess of
the minimum premium value to the share premium account.
(3) In subsection (2) “the minimum premium value” means the amount (if
any) by which the base value of the shares transferred exceeds the
aggregate nominal value of the shares allotted in consideration for the
transfer.
(4) For the purposes of subsection (3), the base value of the shares
transferred shall be taken as —
(a) the cost of those shares to the company transferring them; or
(b) the amount at which those shares are stated in that company’s
accounting records immediately before the transfer;
whichever is the less.
(5) Section 2 shall not apply in any case to which this section applies.
4 Provisions supplementary to sections 2 and 3

[P1981/62/40]
(1) An amount corresponding to any amount representing the premiums or
part of the premiums on shares issued by a company which by virtue of
either of sections 2 and 3 is not included in the company’s share
premium account may also be disregarded in determining the amount at
which any shares or other consideration provided for the shares issued is
to be included in the company’s balance sheet.
(2) In paragraph 15(6) of Schedule 1 to the Companies Act 1982 (in this Act
referred to as “the 1982 Act
”), for the words “(for that or any other
purpose)” (which purport to extend its effect beyond the purpose of
restricting the disclosure of a subsidiary’s profits or losses required by
paragraph 15(4)(b) and (c) of that Schedule) there shall be substituted the
words “(for the purposes of paragraphs 15(4)(b) and (c))”; but this
provision is without prejudice to any other restriction with respect to the
manner in which a holding company may treat pre-acquisition profits or
losses of a subsidiary in its accounts.
(3) References in sections 2 and 3 and in this section (however
expressed) to —
Section 5 Companies Act 1992


Page 10 AT 4 of 1992 c

(a) the acquisition by any company of shares in another company;
and
(b) the issue or allotment of shares to or the transfer of shares to or by
any company;
include references respectively to the acquisition of any of those
shares by and to the issue or allotment or (as the case may
require) the transfer of any of those shares to or by nominees of
that company; and the reference in section 3(4)(a) to the company
transferring the shares there mentioned shall be construed
accordingly.
(4) References in sections 2 and 3 and in this section to the transfer of shares
in a company include references to the transfer of a right to be included
in the company’s register of members in respect of those shares.
(5) In section 2 “arrangement” means any agreement, scheme or
arrangement (including an arrangement sanctioned in accordance with
section 152 or 222 of the 1931 Act).
(6) In sections 2 and 3 and in this section “company
”, except in references to
the issuing company, includes any body corporate.
5 Power to make provision extending or restricting relief from section 46

[P1981/62/41]
(1) The Treasury may by regulations make such provision as appears to it to
be appropriate —
(a) for relieving companies from the requirements of section 46 of the
1931 Act in relation to premiums other than cash premiums; or
(b) for restricting or otherwise modifying any relief from those
requirements provided by sections 1 to 4.
(2) Regulations under this section may contain such incidental and
supplementary provisions as the Treasury thinks fit.
(3) Regulations under this section shall not come into operation unless they
are approved by Tynwald.
Financial assistance for acquisition of shares
6 Meaning of “financial assistance”

[P2006/46/677 and 683(2)]
(1) In sections 6 to 8A (“the sections
”) “financial assistance
” means —
(a) financial assistance given by way of gift;
(b) financial assistance given —
Companies Act 1992 Section 7


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(i) by way of guarantee, security or indemnity (other than an
indemnity in respect of the indemnifier’s own neglect or
default); or
(ii) by way of release or waiver;
(c) financial assistance given —
(i) by way of a loan or any other agreement under which any
of the obligations of the person giving the assistance are to
be fulfilled at a time when in accordance with the
agreement any obligation of another party to the
agreement remains unfulfilled; or
(ii) by way of the novation of, or the assignment of rights
arising under, a loan or such other agreement; or
(d) any other financial assistance given by a company where —
(i) the net assets of the company are reduced to a material
extent by the giving of the assistance; or
(ii) the company has no net assets.
(2) “Net assets” here means the aggregate amount of the company’s assets
less the aggregate amount of its liabilities (for this purpose, “liabilities”
includes any provision (within the meaning of paragraph 27(1)(a) of
Schedule 1 to the Companies Act 1982) except to the extent that the
provision is taken into account in calculating the value of any asset of the
company).
(3) In the sections —
(a) a reference to a person incurring a liability includes that person
changing his or her financial position by making an agreement or
arrangement (whether enforceable or unenforceable, and whether
made on his or her own account or with any other person) or by
any other means; and
(b) a reference to a company giving financial assistance for the
purposes of reducing or discharging a liability incurred by a
person for the purpose of the acquisition of shares includes its
giving such assistance for the purpose of wholly or partly
restoring that person’s financial position to what it was before the
acquisition took place.1

7 Assistance for acquisition of shares in public company prohibited

[P2006/46/678]
(1) Where a person is acquiring or proposing to acquire shares in a public
company, it is not lawful for that company, or a company that is a
subsidiary of that company, to give financial assistance directly or
indirectly for the purpose of the acquisition before or at the same time as
the acquisition takes place.
Section 7 Companies Act 1992


Page 12 AT 4 of 1992 c

(2) Subsection (1) does not prohibit a company from giving financial
assistance for the acquisition of shares in it or its holding company if —
(a) the company’s principal purpose in giving the assistance is not to
give it for the purpose of any such acquisition; or
(b) the giving of the assistance for that purpose is only an incidental
part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the
company.
(3) Where —
(a) a person has acquired shares in a company; and
(b) a liability has been incurred (by that or another person) for the
purpose of the acquisition,
it is not lawful for that company, or a company that is a
subsidiary of that company, to give financial assistance directly or
indirectly for the purpose of reducing or discharging the liability
if, at the time the assistance is given, the company in which the
shares were acquired is a public company.
(4) Subsection (3) does not prohibit a company from giving financial
assistance if —
(a) the company’s principal purpose in giving the assistance is not to
reduce or discharge any liability incurred by a person for the
purpose of the acquisition of shares in the company or its holding
company; or
(b) the reduction or discharge of any such liability is only an
incidental part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the
company.
(5) This section has effect subject to sections 8 and 8A (unconditional and
conditional exceptions to prohibition).2

7A Assistance by public company for acquisition of shares in its private

holding company prohibited

[P2006/46/679]
(1) Where a person is acquiring or proposing to acquire shares in a private
company, it is not lawful for a public company that is a subsidiary of that
company to give financial assistance directly or indirectly for the
purpose of the acquisition before or at the same time as the acquisition
takes place.
(2) Subsection (1) does not prohibit a company from giving financial
assistance for the acquisition of shares in its holding company if —
Companies Act 1992 Section 7


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(a) the company’s principal purpose in giving the assistance is not to
give it for the purpose of any such acquisition; or
(b) the giving of the assistance for that purpose is only an incidental
part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the
company.
(3) Where —
(a) a person has acquired shares in a private company; and
(b) a liability has been incurred (by that or another person) for the
purpose of the acquisition,
it is not lawful for a public company that is a subsidiary of that
company to give financial assistance directly or indirectly for the
purpose of reducing or discharging the liability.
(4) Subsection (3) does not prohibit a company from giving financial
assistance if —
(a) the company’s principal purpose in giving the assistance is not to
reduce or discharge any liability incurred by a person for the
purpose of the acquisition of shares in its holding company; or
(b) the reduction or discharge of any such liability is only an
incidental part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the
company.
(5) This section has effect subject to sections 8 and 8A (unconditional and
conditional exceptions to prohibition).3

7B Prohibited financial assistance an offence

[P2006/46/680]
(1) If a company contravenes section 7(1) or (3) or section 7A(1) or (3)
(prohibited financial assistance) an offence is committed by —
(a) the company; and
(b) every officer of the company who is in default.
(2) A person guilty of an offence under this section is liable —
(a) on summary conviction, to custody for a term not exceeding 6
months or to a fine not exceeding £5,000, or to both;
(b) on conviction on information, to custody for a term not exceeding
2 years or a fine, or to both.4

Section 8 Companies Act 1992


Page 14 AT 4 of 1992 c

8 Unconditional exceptions

[P2006/46/681]
(1) Neither section 7 nor section 7A prohibits a transaction to which this
section applies.
(2) Those transactions are —
(a) a distribution of the company’s assets by way of —
(i) dividend lawfully made; or
(ii) distribution in the course of a company’s winding up;
(b) an allotment of bonus shares;
(c) a reduction of capital confirmed by order of the court under
section 58 of the Companies Act 1931;
(d) a redemption or purchase of shares made in accordance with
sections 9 to 25 of this Act or section 46A of the Companies Act
1931;
(e) anything done under an order of the court made under section
152 of the Companies Act 1931 (order sanctioning compromise or
arrangement with members or creditors);
(f) anything done under an arrangement made in pursuance of
section 222 of the Companies Act 1931 (liquidator in winding up
accepting shares as consideration for sale of company’s property);
(g) anything done under an arrangement made between a company
and its creditors which is binding on the creditors by virtue of
section 239 of the Companies Act 1931.5

8A Conditional exceptions

[P2006/46/682]
(1) Neither section 7 nor section 7A prohibits a transaction to which this
section applies —
(a) if the company giving the assistance is a private company; or
(b) if the company giving the assistance is a public company and —
(i) the company has net assets that are not reduced by the
giving of the assistance; or
(ii) to the extent that those assets are so reduced, the assistance
is provided out of distributable profits.
(2) The transactions to which this section applies are —
(a) where the lending of money is part of the ordinary business of the
company, the lending of money in the ordinary course of the
company’s business;
Companies Act 1992 Section 9


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(b) the provision by the company, in good faith in the interests of the
company or its holding company, of financial assistance for the
purposes of an employees’ share scheme;
(c) the provision of financial assistance by the company for the
purposes of or in connection with anything done by the company
(or another company in the same group) for the purpose of
enabling or facilitating transactions in shares in the first-
mentioned company or its holding company between, and
involving the acquisition of beneficial ownership of those
shares by —
(i) bona fide employees or former employees of that company
(or another company in the same group); or
(ii) spouses or civil partners, widows, widowers or surviving
civil partners or minor children or step-children of any
such employees or former employees;6

(d) the making by the company of loans to persons (other than
directors) employed in good faith by the company with a view to
enabling those persons to acquire fully paid shares in the
company or its holding company to be held by them by way of
beneficial ownership.
(3) The references in this section to “net assets” are to the amount by which
the aggregate of the company’s assets exceeds the aggregate of its
liabilities.
(4) For this purpose —
(a) the amount of both assets and liabilities shall be taken to be as
stated in the company’s accounting records immediately before
the financial assistance is given; and
(b) “liabilities” includes any amount retained as reasonably necessary
for the purpose of providing for a liability the nature of which is
clearly defined and that is either likely to be incurred or certain to
be incurred but uncertain as to amount or as to the date on which
it will arise.
(5) For the purposes of subsection (2)(c) a company is in the same group as
another company if it is a holding company or subsidiary of that
company or a subsidiary of a holding company of that company.7

Power of company to issue redeemable shares
9 Power of company to issue redeemable shares

[P1981/62/45]
(1) Subject to the following provisions of this Part, a company limited by
shares or limited by guarantee and having a share capital may, if
Section 9 Companies Act 1992


Page 16 AT 4 of 1992 c

authorised to do so by its articles, issue shares which are to be redeemed
or are liable to be redeemed at the option of the company or the
shareholder.
(2) No redeemable shares may be issued at any time when there are no
issued shares of the company which are not redeemable.
(3) Redeemable shares may not be redeemed unless they are fully paid.
(4) The terms of redemption must provide for payment on redemption.
(5) Subject to subsection (6) and sections 18 and 23(4) —
(a) redeemable shares may only be redeemed out of distributable
profits of the company or out of the proceeds of a fresh issue of
shares made for the purposes of the redemption; and
(b) any premium payable on redemption must be paid out of
distributable profits of the company.
(6) Where the redeemable shares were issued at a premium, any premium
payable on their redemption may be paid out of the proceeds of a fresh
issue of shares made for the purposes of the redemption, up to an
amount equal to —
(a) the aggregate of the premiums received by the company on the
issue of the shares redeemed; or
(b) the current amount of the company’s share premium account
(including any sum transferred to that account in respect of
premiums on the new shares);
whichever is the less; and in any such case the amount of the company’s
share premium account shall be reduced by a sum corresponding (or by
sums in the aggregate corresponding) to the amount of any payment
made by virtue of this subsection out of the proceeds of the issue of the
new shares.
(7) Subject to the provisions of this Part, the redemption of shares under this
section may be effected on such terms and in such manner as may be
determined by or in accordance with the articles of the company.
(8) Shares redeemed under this section shall be treated as cancelled on
redemption, and the amount of the company’s issued share capital shall
be diminished by the nominal value of those shares accordingly; but the
redemption of shares under this section by a company shall not be taken
as reducing the amount of the company’s authorised share capital.
(9) Without prejudice to subsection (8), where a company is about to redeem
any shares under this section it shall have power to issue shares up to the
nominal amount of the shares to be redeemed as if those shares had
never been issued.
Companies Act 1992 Section 10


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(10) This section and sections 17 to 25 do not apply in respect of preference
shares to which section 46A of the 1931 Act applies (power to issue
redeemable preference shares).
Purchase by a company of its own shares
10 Power to purchase own shares

[P1981/62/46]
(1) Subject to the following provisions of this Part, a company limited by
shares or limited by guarantee and having a share capital may, if
authorised to do so by its articles, purchase its own shares (including any
redeemable shares).
(1A) Notwithstanding anything to the contrary in this section, a company may
purchase and hold its shares in treasury in accordance with regulations
under section 25A (power to permit the holding of treasury shares.)8

(1A) Subject only to subsection (3), a company may purchase and hold its
shares in treasury in accordance with regulations under section 25A
(power to permit the holding of treasury shares).9

(2) Section 9 (except subsection (4) of that section) shall apply in relation to
the purchase by a company under this section of any of its own shares as
it applies in relation to the redemption of redeemable shares by a
company under that section, save that the terms and manner of purchase
need not be determined by or in accordance with the articles as required
by subsection (7) of that section.
(3) A company may not purchase any of its shares under this section if as a
result of the purchase of the shares in question there would no longer be
any member of the company holding shares other than —
(a) redeemable shares; or
(b) treasury shares.10

11 Authority for off-market purchase

[P1981/62/47]
(1) This section applies to an off-market purchase by a company of any of its
own shares.
(2) A purchase by a company of any of its own shares is an off-market
purchase for the purposes of this section if either —
(a) the shares are purchased otherwise than on a recognised stock
exchange; or
(b) the shares are purchased on a recognised stock exchange but are
not subject to a marketing arrangement on that stock exchange.
Section 11 Companies Act 1992


Page 18 AT 4 of 1992 c

(3) For the purposes of this section shares of a company are subject to a
marketing arrangement on a recognised stock exchange if either —
(a) they are listed on that stock exchange; or
(b) the company has been accorded facilities for dealings in those
shares to take place on that stock exchange without prior
permission for individual transactions from the authority
governing that stock exchange and without limit as to the time
during which those facilities are to be available.
(4) A company may only make an off-market purchase of its own shares
under a contract approved in advance in accordance with the following
provisions of this section or under section 12.
(5) The terms of the proposed contract of purchase must be authorised by a
special resolution of the company before the company enters into the
contract.
(6) Subject to subsection (7), the authority conferred by any such resolution
may be varied, revoked or from time to time renewed by special
resolution of the company.
(7) In the case of a public company the authority for a proposed contract of
purchase conferred by any such resolution must specify a date on which
the authority is to expire.
(8) The date specified in accordance with subsection (7) in any special
resolution of a public company to confer or renew authority for a
proposed contract of purchase shall not be later than 18 months after the
date on which the resolution is passed.
(9) A special resolution of a company to confer, vary, revoke or renew
authority for a proposed contract for the purchase of any of its own
shares shall not be effective for the purposes of this section if any
member of the company holding shares to which the resolution relates
exercises the voting rights carried by any of those shares in voting on the
resolution and the resolution would not have been passed if he had not
done so.
For the purposes of this subsection a member who holds shares to which
the resolution relates shall be regarded as exercising the voting rights
carried by those shares in voting on the resolution not only if he votes in
respect of those shares on a poll on the question whether that resolution
shall be passed but also if he votes on that resolution otherwise than on a
poll; and, notwithstanding anything in a company’s articles, any member
of the company may demand a poll on the question whether any such
resolution shall be passed.
(10) Any such resolution shall not be effective for the purposes of this section
unless (if the proposed contract of purchase is in writing) a copy of that
contract or (if it is not in writing) a written memorandum of its terms is
available for inspection by members of the company both —
Companies Act 1992 Section 12


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(a) at the registered office of the company for not less than the period
of 15 days ending with the date of the meeting at which the
resolution is passed; and
(b) at the meeting itself.
Any memorandum of the terms of the contract of purchase made
available for the purposes of this section must include the names of any
members holding shares to which the contract relates, and any copy of
the contract made available for those purposes must have annexed to it a
written memorandum specifying any such names which do not appear
in the contract itself.
(11) A company may agree to a variation of an existing contract of purchase
approved under this section, but only if the variation is authorised by a
special resolution of the company before the company agrees to it; and
subsections (6) to (10) shall apply in relation to the authority for a
proposed variation as they apply in relation to the authority for a
proposed contract of purchase, save that a copy or memorandum (as the
case may require) of the original contract (together with any variations
previously made) must also be available for inspection in accordance
with subsection (10).
(12) For the purposes of this section a vote and a demand for a poll by a
person as proxy for a member shall be the same respectively as a vote
and a demand by the member.
12 Contingent purchase contracts

[P1981/62/48]
(1) This section applies to the purchase by a company of its own shares
under a contract relating to any of its shares —
(a) which does not amount to a contract to purchase those shares; but
(b) under which the company may (subject to any conditions) become
entitled or obliged to purchase those shares;
and any such contract is referred to in this section as a contingent
purchase contract.
(2) A company may only make a purchase of its own shares under a
contingent purchase contract if the contract is approved in advance in
accordance with subsection (3).
(3) The terms of the proposed contract must be authorised by a special
resolution of the company before the company enters into the contract,
and subsections (6) to (12) of section 11 shall apply in relation to the
authority for a proposed contingent purchase contract and the variation
of an existing contingent purchase contract respectively as they apply in
relation to the authority for a proposed contract of purchase and the
variation of an existing contract of purchase.
Section 13 Companies Act 1992


Page 20 AT 4 of 1992 c

13 Authority for market purchase

[P1981/62/49]
(1) This section applies to a market purchase by a company of any of its own
shares.
(2) A purchase by a company of any of its own shares is a market purchase
for the purposes of this section if it is a purchase made on a recognised
stock exchange, other than a purchase which is an off-market purchase
for the purposes of section 11 by virtue of subsection (2)(b) of that
section.
(3) A company shall not make a market purchase of its own shares unless
the purchase has first been authorised by the company in general
meeting.
(4) A resolution authorising market purchases of a company’s own shares in
accordance with this section may confer general authority for that
purpose or authority limited to the purchase of shares of any particular
class or description, and the authority conferred may be unconditional or
subject to conditions.
(5) Any such authority must —
(a) specify the maximum number of shares authorised to be acquired;
(b) determine both the maximum and the minimum prices which
may be paid for those shares; and
(c) specify a date on which the authority is to expire.
(6) Subject to subsection (5), any such authority may be varied, revoked or
from time to time renewed by the company in general meeting.
(7) The date specified in accordance with subsection (5)(c) in any resolution
of a company to confer or renew authority for market purchases shall not
be later than 18 months after the date on which the resolution is passed.
(8) A company may make a purchase of its own shares in accordance with
this section after the expiry of any time limit imposed by virtue of
subsection (5)(c) in any case where the contract of purchase was
concluded before the authority expired and the terms of the authority
permitted the company to make a contract of purchase which would or
might be executed wholly or partly after the authority expired.
(9) A resolution of a company to confer or vary authority for market
purchases of its own shares may determine either or both of the prices
mentioned in subsection (5)(b) by —
(a) specifying a particular sum; or
(b) providing a basis or formula for calculating the amount of the
price in question without reference to any person’s discretion or
opinion.
Companies Act 1992 Section 14


c AT 4 of 1992 Page 21

(10) Section 117 of the 1931 Act (registration of copies of certain resolutions
and agreements) shall apply to any resolution of a company conferring,
varying, revoking or renewing any such authority.
14 Assignment or release of company’s right to purchase own shares

[P1981/62/50]
(1) The rights of a company under any contract approved under section 11
or 12 or any contract for a purchase authorised under section 13 shall not
be capable of assignment.
(2) Any agreement by a company to release its rights under any contract
approved under section 11 or 12 shall be void unless the release is
approved in advance in accordance with subsection (3).
(3) The terms of the proposed release agreement must be authorised by a
special resolution of the company before the company enters into the
agreement; and subsections (6) to (12) of section 11 shall apply in relation
to the authority for a proposed release agreement as they apply in
relation to the authority for a proposed variation of an existing contract
of purchase.
15 Payments apart from purchase price to be made out of distributable

profits

[P1981/62/51]
(1) Any payment made by a company in consideration of —
(a) acquiring any right with respect to the purchase of any of its own
shares under a contract approved under section 12;
(b) the variation of any contract approved under section 11 or 12; or
(c) the release of any of the company’s obligations with respect to the
purchase of any of its own shares under any contract approved
under section 11 or 12 or under any contract for a purchase
authorised under section 13;
must be made out of distributable profits of the company.
(2) If the requirements of subsection (1) are not satisfied in relation to any
contract —
(a) in a case within subsection (1)(a), no purchase by the company of
any of its own shares under that contract shall be lawful by virtue
of this Part;
(b) in a case within subsection (1)(b), no such purchase following the
variation shall be lawful by virtue of this Part; and
(c) in a case within subsection (1)(c), the purported release shall be
void.
Section 16 Companies Act 1992


Page 22 AT 4 of 1992 c

16 Disclosure of particulars of purchases and authorised contracts

[P1981/62/52]
(1) Within the period of one month beginning with the date on which any
shares purchased by a company under section 10 are delivered to the
company the company shall deliver to the Department of Economic
Development for registration a return in the prescribed form stating with
respect to shares of each class purchased the number and nominal value
of those shares and the date on which they were delivered to the
company.11

(2) In the case of a public company the return required by this section shall
also state —
(a) the aggregate amount paid by the company for the shares; and
(b) the maximum and minimum prices paid in respect of shares of
each class purchased.
(3) Particulars of shares delivered to the company on different dates and
under different contracts may be included in a single return under this
section; and in any such case the amount required to be stated by
subsection (2)(a) shall be the aggregate amount paid by the company for
all the shares to which the return relates.
(4) Where a company enters into any contract approved under section 11 or
12 or any contract for a purchase authorised under section 13 the
company shall keep at its registered office —
(a) if the contract is in writing, a copy of that contract; or
(b) if it is not in writing, a memorandum of its terms;
from the conclusion of the contract until the end of the period of 6
years beginning with the date on which the purchase of all the
shares under the contract is completed or (as the case may be) the
date on which the contract otherwise determines.
(5) Every copy and memorandum required to be kept by subsection (4)
shall, on the payment of such reasonable charge as the company
prescribes, during business hours (subject to such reasonable restrictions
as the company may in general meeting impose, provided that not less
than 2 hours in each day are allowed for inspection) be open to the
inspection —
(a) of any member of the company; and
(b) if the company is a public company, of any other person.
(6) If default is made in delivering to the Department of Economic
Development any return required by this section, every officer of the
company who is in default shall be liable —
(a) on conviction on information to a fine;
Companies Act 1992 Section 17


c AT 4 of 1992 Page 23

(b) on summary conviction to a fine not exceeding £5,000 or, on
conviction after continued contravention, to a default fine not
exceeding £200.12

(7) If default is made in complying with subsection (4) or if an inspection
required under subsection (5) is refused, the company and every officer
of the company who is in default shall be liable on summary conviction
to a fine not exceeding £2,500 or, on conviction after continued
contravention, to a default fine not exceeding £40.
(8) In the case of a refusal of an inspection required under subsection (5) of a
copy or memorandum, the court may by order compel an immediate
inspection of the copy or memorandum.
(9) The obligation of a company under subsection (4) to keep a copy of any
contract or (as the case may be) a memorandum of its terms shall apply
to any variation of that contract so long as it applies to that contract.
Maintenance of capital on redemption or purchase of own shares otherwise than out of
capital
17 The capital redemption reserve fund

[P1981/62/53]
(1) Where under section 9 or 10 any shares of a company are redeemed or
purchased wholly out of the profits of the company the amount by which
the company’s issued share capital is diminished in accordance with
subsection (8) of section 9 on cancellation of the shares redeemed or
purchased shall be transferred to the capital redemption reserve fund.
(2) Subject to subsection (6)(b) of section 18, where under that section any
shares of a company are redeemed or purchased wholly or partly out of
the proceeds of a fresh issue and the aggregate amount of those proceeds
is less than the aggregate nominal value of the shares redeemed or
purchased, the amount of the difference shall be transferred to the capital
redemption reserve fund.
Redemption or purchase of own shares out of capital
18 Power of private companies to redeem or purchase own shares out of

capital

[P1981/62/54]
(1) Subject to the following provisions of this Part, a private company
limited by shares or limited by guarantee and having a share capital
may, if authorised to do so by its articles, make a payment in respect of
the redemption or purchase under section 9 or (as the case may be) under
section 10 of any of its own shares otherwise than out of distributable
profits of the company or the proceeds of a fresh issue of shares; and
Section 18 Companies Act 1992


Page 24 AT 4 of 1992 c

references in this Part to payment out of capital are (subject to subsection
(6)) references to any payment so made (whether or not it would be
regarded apart from this section as a payment out of capital).
(2) The payment which may (if authorised in accordance with the following
provisions of this Part) be made by any company out of capital in respect
of the redemption or purchase of any of its own shares shall be such an
amount as, taken together with —
(a) any available profits of the company; and
(b) the proceeds of any fresh issue of shares made for the purposes of
the redemption or purchase;
is equal to the price of redemption or purchase.
(3) The payment permissible in accordance with subsection (2) in respect of
the redemption or purchase by a company of any of its own shares is
referred to in this Part as the permissible capital payment for the shares.
(4) Subject to subsection (6), if the permissible capital payment for any
shares redeemed or purchased by a company is less than their nominal
amount, the amount of the difference shall be transferred to the capital
redemption reserve fund.
(5) Subject to subsection (6), if the permissible capital payment for any
shares redeemed or purchased by a company is greater than their
nominal amount the amount of any capital redemption reserve fund,
share premium account or fully paid share capital of the company may
be reduced by a sum not exceeding (or by sums not in the aggregate
exceeding) the amount by which the permissible capital payment
exceeds the nominal amount of those shares.
(6) In any case where the proceeds of a fresh issue are applied by a company
in making any redemption or purchase of its own shares in addition to a
payment out of capital under this section —
(a) the references in subsections (4) and (5) to the permissible capital
payment shall be read as references to the aggregate of that
payment and those proceeds;
(b) subsection (2) of section 17 shall not apply.
(7) The reference in subsection (2)(a) to available profits of the company is a
reference to the company’s profits which are available for distribution
and the question whether a company has any profits so available and the
amount of any such profits shall be determined for the purposes of this
section in accordance with the following provisions of this section.
(8) Subject to subsection (9), that question shall be determined by reference
to such accounts, prepared as at any date within the period of 3 months
ending with the date on which the statutory declaration of the directors
purporting to specify the amount of the permissible capital payment is
Companies Act 1992 Section 19


c AT 4 of 1992 Page 25

made under section 19(3), as are necessary to enable a reasonable
judgment to be made.
(9) For the purposes of determining the amount of the permissible capital
payment for any shares under this section, the amount of the company’s
available profits (if any) determined in accordance with subsection (8)
shall be treated as reduced by the amount of any distributions lawfully
made by the company after the date of the relevant accounts and before
the end of the period for determining the amount of that payment.
(10) References in this section to the period for determining the amount of the
permissible capital payment for any shares are references to the period of
3 months ending with the date on which the statutory declaration of the
directors purporting to specify the amount of that payment is made in
accordance with section 19(3).
19 Requirements for redemption or purchase out of capital: special

resolution approving payment

[P1981/62/55]
(1) Subject to any order made by the court under section 21 a payment out of
capital by any company for the redemption or purchase of any of its own
shares shall not be lawful by virtue of section 18 unless the requirements
of this section and section 20 are satisfied.
(2) The payment out of capital must be approved by a special resolution of
the company (referred to in this section and in section 20 as the
resolution for payment out of capital).
(3) The directors of the company must make a statutory declaration
specifying the amount of the permissible capital payment for the shares
in question and stating that, having made full inquiry into the affairs and
prospects of the company, they have formed the opinion —
(a) as regards its initial situation immediately following the date on
which the payment out of capital is proposed to be made, that
there will be no ground on which the company could then be
found to be unable to pay its debts; and
(b) as regards its prospects for the year immediately following that
date, that, having regard to their intentions with respect to the
management of the company’s business during that year and to
the amount and character of the financial resources which will in
their view be available to the company during that year, the
company will be able to continue to carry on business as a going
concern (and will accordingly be able to pay its debts as they fall
due) throughout that year.
(4) In forming their opinion for the purposes of subsection (3)(a) the
directors shall take into account any liabilities of the company which the
court would be required by paragraph (3) of section 163(1) of the 1931
Section 19 Companies Act 1992


Page 26 AT 4 of 1992 c

Act to take into account in determining for the purposes of section 162(5)
of that Act (circumstances in which a company may be wound up by the
court) whether the company was unable to pay its debts.
(5) The statutory declaration made by the directors must be in the prescribed
form and contain such information with respect to the nature of the
company’s business as may be prescribed, and must in addition have
annexed to it a report addressed to the directors by the auditors of the
company stating that —
(a) they have inquired into the company’s state of affairs; and
(b) the amount specified in that declaration as the permissible capital
payment for the shares in question is in their view properly
determined in accordance with section 18 of this Act; and
(c) they are not aware of anything to indicate that the opinion
expressed by the directors in that declaration as to any of the
matters mentioned in subsection (3) is unreasonable in all the
circumstances.
(6) The resolution for payment out of capital must be passed on, or within
the week immediately following, the date on which the directors make
the statutory declaration required by subsection (3), and the payment out
of capital must be made not earlier than 5 nor more than 7 weeks after
the date of the resolution.
(7) A special resolution of a company to approve a payment out of capital
for the redemption or purchase of any of its own shares shall not be
effective for the purposes of this section if any member of the company
holding shares to which the resolution relates exercises the voting rights
carried by any of those shares in voting on the resolution and the
resolution would not have been passed if he had not done so.
For the purposes of this subsection a member who holds shares to which
the resolution relates shall be regarded as exercising the voting rights
carried by those shares in voting on the resolution not only if he votes in
respect of those shares on a poll on the question whether that resolution
shall be passed but also if he votes on that resolution otherwise than on a
poll; and, notwithstanding anything in a company’s articles, any member
of the company may demand a poll on the question whether any such
resolution shall be passed.
(8) Any such resolution shall not be effective for the purposes of this section
unless copies of the statutory declaration and auditors’ report required
by this section are available for inspection by members of the
company —
(a) at the registered office of the company from the day on which the
declaration is made until the day of the meeting at which the
resolution is passed; and
(b) at that meeting.
Companies Act 1992 Section 20


c AT 4 of 1992 Page 27

(9) Any director of a company who makes a declaration under this section
without having reasonable grounds for the opinion expressed in that
declaration shall be liable —
(a) on conviction on information to imprisonment for a term not
exceeding 2 years or a fine, or both; and
(b) on summary conviction, to imprisonment for a term not
exceeding 6 months or a fine not exceeding £5,000, or both.
(10) For the purposes of this section a vote and a demand for a poll by a
person as proxy for a member shall be the same respectively as a vote
and a demand by the member.
20 Publicity for proposed payment out of capital

[P1981/62/56]
(1) Within the week immediately following the date of the resolution for
payment out of capital the company must cause to be published in 2
newspapers published and circulating in the Island a notice —
(a) stating that the company has approved a payment out of capital
for the purpose of acquiring its own shares by redemption or
purchase or both (as the case may require);
(b) specifying the amount of the permissible capital payment for the
shares in question and the date of the resolution for payment out
of capital;
(c) stating that the statutory declaration of the directors and the
auditors’ report required by section 19 are available for inspection
at the company’s registered office; and
(d) stating that any creditor of the company may at any time within
the 5 weeks immediately following the date of the resolution for
payment out of capital apply to the court under section 21 for an
order prohibiting the payment.
(2) Within the week immediately following the date of that resolution the
company must also either —
(a) cause a notice to the same effect as that required by subsection (1)
to be published in 2 newspapers circulating throughout the
country or territory in which, in the opinion of the directors, a
substantial number of the creditors of the company reside; or
(b) give notice in writing to that effect to each of its creditors.
(3) References in this section to the first notice date are references to the day
on which the company first publishes the notice required by subsection
(1) or first publishes or gives the notice required by subsection (2)
(whichever is the earlier).
Section 21 Companies Act 1992


Page 28 AT 4 of 1992 c

(4) Not later than the first notice date the company must deliver a copy of
the statutory declaration of the directors and the auditors’ report
required by section 19 to the Department of Economic Development.13

(5) The statutory declaration and auditors’ report shall be kept at the
company’s registered office throughout the period beginning with the
first notice date and ending 5 weeks after the date of the resolution for
payment out of capital and shall during business hours on any day
during that period be open to the inspection of any member or creditor
of the company without charge.
(6) If an inspection required under subsection (5) is refused, the company
and every officer of the company who is in default shall be liable on
summary conviction to a fine not exceeding £2,500 or, on conviction after
continued contravention, to a default fine not exceeding £40.
(7) In the case of a refusal of an inspection required under subsection (5) of a
declaration or report, the court may by order compel an immediate
inspection of that declaration or report.
21 Objections by members or creditors

[P1981/62/57]
(1) Where a private company passes a special resolution approving for the
purposes of this Part any payment out of capital for the redemption or
purchase of any of its shares —
(a) any member of the company other than one who consented to or
voted in favour of the resolution; and
(b) any creditor of the company;
may within 5 weeks of the date on which the resolution was
passed apply to the court for the cancellation of the resolution.
(2) An application under this section may be made on behalf of the persons
entitled to make the application by such one or more of their number as
they may appoint in writing for the purpose.
(3) If an application is made under this section, the company shall —
(a) forthwith give notice in the prescribed form of that fact to the
Department of Economic Development; and14

(b) within 15 days from the making of any order of the court on the
hearing of the application, or such longer period as the court may
by order direct, deliver an office copy of the order to the
Department of Economic Development.15

(4) On the hearing of an application under this section the court may, if it
thinks fit, adjourn the proceedings in order that an arrangement may be
made to the satisfaction of the court for the purchase of the interests of
dissentient members or for the protection of dissentient creditors, as the
case may be, and the court may give such directions and make such
Companies Act 1992 Section 22


c AT 4 of 1992 Page 29

orders as it thinks expedient for facilitating or carrying into effect any
such arrangement.
(5) Without prejudice to its powers under subsection (4), on the hearing of
an application under subsection (1), the court shall make an order on
such terms and conditions as it thinks fit either confirming or cancelling
the resolution; and, where the court confirms the resolution, it may in
particular by order alter or extend any date or period of time specified in
the resolution or in any provision of this Part which applies to the
redemption or purchase of shares to which the resolution refers.
(6) A company which fails to comply with subsection (3) and any officer of
the company who is in default shall be liable on summary conviction to a
fine not exceeding £2,500 or, on conviction after continued contravention,
to a default fine not exceeding £40.
(7) An order under this section may, if the court thinks fit, provide for the
purchase by the company of the shares of any members of the company
and for the reduction accordingly of the company’s capital and make
such alterations in the memorandum and articles of the company as may
be required in consequence of that provision.
(8) Where an order under this section requires the company not to make
any, or any specified, alteration in its memorandum or articles, then,
notwithstanding anything in the Companies Acts 1931 to 1992, the
company shall not have the power without the leave of the court to make
any such alteration in breach of that requirement.
(9) Any alteration in the memorandum or articles of the company made by
virtue of an order under this section, other than one made by resolution
of the company, shall be of the same effect as if duly made by resolution
of the company, and the provisions of the Companies Acts 1931 to 1992
shall apply to the memorandum and articles as so altered accordingly.
22 Liability of past shareholders and directors

[P1981/62/58]
(1) This section applies where a company has made a payment out of capital
in respect of the redemption or purchase of any of its shares, referred to
as the “relevant payment”.
(2) Where the company is being wound up and the aggregate of the amount
of its assets and the amounts paid by way of contribution to its assets
(apart from this section) is not sufficient for payment of its debts and
liabilities and the costs, charges and expenses of the winding up, then, if
the winding up commenced within one year of the date on which the
relevant payment was made —
(a) the person from whom the shares were redeemed or purchased;
and
Section 23 Companies Act 1992


Page 30 AT 4 of 1992 c

(b) the directors of the company who signed the statutory declaration
made in accordance with section 19(3) for the purposes of the
redemption or purchase, except a director who shows that he had
reasonable grounds for forming the opinion set out in the
declaration;
shall, so as to enable that insufficiency to be met, be liable to contribute to
the assets of the company to the extent specified in subsection (3).
(3) A person from whom any of the shares were redeemed or purchased
shall be liable to contribute to the assets of the company an amount not
exceeding the amount of so much of the relevant payment as was made
by the company in respect of his shares and the directors of the company
shall be jointly and severally liable with that person to contribute that
amount to the assets of the company.
(4) Any person who has contributed an amount to the assets of a company
under this section may apply to the court for an order directing any other
person jointly and severally liable in respect of that amount to pay to him
such amount as the court thinks just and equitable.
(5) Section 156 of the 1931 Act (liability of contributories) shall not apply in
relation to any liability accruing by virtue of this section.
(6) Any reference in the articles of any company to a contributory shall not
unless the context requires include a reference to any person who is a
contributory only by virtue of this section.
(7) A person who is liable by virtue of this section to contribute to the assets
of any company in the event of its being wound up may by petition
apply to the court for the winding up of the company on either of the
grounds set out in paragraphs (5) and (6) of section 162 of the 1931 Act
(inability of company to pay its debts and the “just and equitable”
ground) and paragraph (a) of the proviso to section 164(1) of that Act
(restrictions on right of contributory to present petition) shall not apply
in relation to a petition made by any such person; but unless he is a
contributory otherwise than by virtue of this section he may not in his
character as contributory present such a petition on any other ground.
Miscellaneous and supplemental
23 Effect of company’s failure to redeem or purchase own shares

[P1981/62/59]
(1) Where on or after the appointed day a company —
(a) issues shares on terms that they are or are liable to be redeemed;
or
(b) agrees to purchase any of its own shares;
Companies Act 1992 Section 23


c AT 4 of 1992 Page 31

the following provisions of this section shall apply in relation
thereto.
(2) A company shall not be liable in damages in respect of any failure on its
part to redeem or purchase any of the shares.
(3) Subsection (2) is without prejudice to any right of the holder of any of the
shares other than his right to sue the company for damages in respect of
its failure; but the court shall not grant an order for specific performance
of the terms of redemption or purchase if the company shows that it is
unable to meet the cost of redeeming or purchasing the shares in
question out of distributable profits.
(4) Where the company is wound up and at the commencement of the
winding up any of the shares have not been redeemed or purchased then
subject to the following provisions of this section the terms of
redemption or purchase may be enforced against the company; and
when shares are redeemed or purchased under this subsection they shall
be treated as cancelled.
(5) Subsection (4) shall not apply if —
(a) the terms of redemption or purchase provided for the redemption
or purchase to take place at a date later than the date of the
commencement of the winding up; or
(b) during the period beginning with the date on which the
redemption or purchase was to have taken place and ending with
the commencement of the winding up the company could not at
any time have lawfully made a distribution equal in value to the
price at which the shares were to have been redeemed or
purchased.
(6) There shall be paid in priority to any amount which the company is
liable by virtue of subsection (4) to pay in respect of any shares —
(a) all other debts and liabilities of the company (other than any due
to members in their character as such);
(b) if other shares carry rights whether as to capital or as to income
which are preferred to the rights as to capital attaching to the first
mentioned shares, any amount due in satisfaction of those
preferred rights;
but, subject to that, any such amount shall be paid in priority to any
amounts due to members in satisfaction of their rights (whether as to
capital or income) as members.
(7) Where by virtue of section 23(3) of the Bankruptcy Code 1892 (payment
of interest on debts) as applied by section 248 of the 1931 Act (application
of bankruptcy rules to insolvent companies) a creditor of a company is
entitled to payment of any interest only after payment of all other debts
Section 24 Companies Act 1992


Page 32 AT 4 of 1992 c

of the company, the company’s debts and liabilities shall for the
purposes of subsection (6) include the liability to pay that interest.
24 Power to alter certain provisions with respect to redemption or

purchase by a company of its own shares

[P1981/62/61]
(1) The Treasury may by regulations modify the provisions of this Part with
respect to any of the following matters —
(a) the authority required for a purchase by a company of any of its
own shares;
(b) the authority required for the release by a company of its rights
under any contract for the purchase of its own shares or any
contract under which the company may (subject to any
conditions) become entitled or obliged to purchase any of its own
shares;
(c) the information to be included in any return delivered by a
company to the Department of Economic Development in
accordance with section 16(1);16

(d) the matters to be dealt with in the statutory declaration of the
directors required by section 19 with a view to indicating their
opinion of their company’s ability to make a proposed payment
out of capital with due regard to its financial situation and
prospects; and
(e) the contents of the auditors’ report required by that section to be
annexed to that declaration.
(2) The Treasury may also by regulations make such provision (including
provision by way of modifying the provisions of this Part) as appears to
it to be appropriate —
(a) for wholly or partly relieving companies from the requirement
under section 18(2)(a) that any available profits must be taken into
account in determining the amount of the permissible capital
payment for any shares under that section; or
(b) for permitting a company’s share premium account to be applied,
to any extent appearing to the Treasury to be appropriate, in
providing for the premiums payable on the redemption or
purchase by the company of any of its own shares.
(3) Regulations under this section may make such further modifications of
any provisions of this Part as appear to the Treasury to be reasonably
necessary in consequence of any provision made by any such regulations
by virtue of subsection (1) or (2).
(4) Regulations under this section shall not come into operation unless they
have been approved by Tynwald.
Companies Act 1992 Section 25


c AT 4 of 1992 Page 33

25 Interpretation of Part 1

[P1981/62/62]
In this Part —
“capital redemption reserve fund
” has the same meaning as in section 46A of
the 1931 Act;
“distributable profits
”, in relation to the making of any payment or the giving
of any financial assistance (within the meaning of section 6) by any
company, means those profits out of which it could lawfully make a
distribution equal in value to that payment or assistance;17

“distribution
” means every description of distribution of a company’s assets to
members of the company, whether in cash or otherwise, except
distributions made by way of —
(a) an issue of shares as fully or partly paid bonus shares;
(b) the redemption of preference shares out of the proceeds of a fresh
issue of shares made for the purposes of the redemption and the
payment of any premium on their redemption out of the
company’s share premium account;
(c) the reduction of share capital by extinguishing or reducing the
liability of any of the members on any of its shares in respect of
share capital not paid up or by paying off paid up share capital;
and
(d) a distribution of assets to members of the company on its winding
up;
“permissible capital payment
” has the meaning given by section 18(3);
and references to payment out of capital shall be construed in accordance with
section 18(1).
Treasury shares
25A Power to permit the holding of treasury shares

(1) The Department of Economic Development may by regulations make
such provision (including provision by way of modification to the
provisions of this Part or to Part II of the Companies Act 1931) as it
considers appropriate to permit a company —
(a) to hold its own shares as treasury shares; and
(b) to deal with those treasury shares in accordance with the
provisions of the regulations.18

(2) In subsection (1), a reference to a company holding its own shares as
treasury shares is to the company holding such shares which —
Section 26 Companies Act 1992


Page 34 AT 4 of 1992 c

(a) were (or are to be treated as having been) purchased by it in
circumstances prescribed in the regulations referred to in
subsection (1); and
(b) have been held by the company continuously since they were so
purchased (or treated as so purchased).
(3) Regulations under subsection (1) may make such further modification to
the provisions of this Part or to Part II of the Companies Act 1931 as
appear to the Department of Economic Development to be reasonably
necessary in consequence of any provision made by the regulations.19

(4) Regulations under subsection (1) shall not come into operation unless
they are approved by Tynwald.20

PART 2 – MISCELLANEOUS AND SUPPLEMENTAL

26 Power of the Court to require rectification of default

(1) to (3) [Repealed]21

(4) Without prejudice to any other powers of the Court, where a person is in
default in relation to any provision of the Companies Acts 1931 to 2004
or the Companies Act 2006 the Court may, on an application to it by either
the Department of Economic Development or the Isle of Man Financial
Services Authority or by any person affected by the default, by order
direct the person in default (whether or not he is in the Island) to rectify
the default forthwith.22

(5) [Repealed]23

27 [Repealed]
24

28 Transfer of securities

(1) The Isle of Man Financial Services Authority with the concurrence of the
Treasury may make provision by regulations for enabling title to
securities to be evidenced and transferred without a written instrument.
In this section —
(a) “securities” means shares, stock, debentures, debenture stock,
loan stock, bonds, units of a collective investment scheme within
the meaning of the Collective Investment Schemes Act 2008 and
other securities of any description;25

(b) references to title to securities include any legal or equitable
interest in securities; and
(c) references to a transfer of title include a transfer by way of
security.26

Companies Act 1992 Section 28


c AT 4 of 1992 Page 35

(2) The regulations may make provision —
(a) for procedures for recording and transferring title to securities,
and
(b) for the regulation of those procedures and the persons responsible
for or involved in their operation.
(3) The regulations shall contain such safeguards as appear to the Isle of
Man Financial Services Authority appropriate for the protection of
investors and for ensuring that competition is not restricted, distorted or
prevented.27

(4) The regulations may for the purpose of enabling or facilitating the
operation of the new procedures make provision with respect to the
rights and obligations of persons in relation to securities dealt with
under the procedures.
But the regulations shall be framed so as to secure that the rights and
obligations in relation to securities dealt with under the new procedures
correspond, so far as practicable, with those which would arise apart
from any regulations under this section.
(5) The regulations may include provision for the purpose of giving
effect to —
(a) the transmission of title to securities by operation of law;
(b) any restriction on the transfer of title to securities arising by virtue
of the provisions of any enactment or instrument, court order or
agreement;
(c) any power conferred by any such provision on a person to deal
with securities on behalf of the person entitled.
(6) The regulations may make provision with respect to the persons
responsible for the operation of the new procedures —
(a) as to the consequences of their insolvency or incapacity, or
(b) as to the transfer from them to other persons of their functions in
relation to the new procedures.
(7) The regulations may for the purposes mentioned above —
(a) modify or exclude any provision of any enactment or instrument,
or any rule of law;
(b) apply, with such modifications as may be appropriate, the
provisions of any enactment or instrument (including provisions
creating criminal offences);
(c) require the payment of fees, or enable persons to require the
payment of fees, of such amounts as may be specified in the
regulations or determined in accordance with them.
(8) Regulations under this section shall not come into effect unless they are
approved by Tynwald.
Section 29 Companies Act 1992


Page 36 AT 4 of 1992 c

29 Names of public companies

(1) The name of a public company to which this section applies and which is
limited by shares or by guarantee must end with the words “public
limited company” and those words may not be preceeded by the word
“limited”.
(2) This section applies to —
(a) every public company other than an existing public company; and
(b) any existing public company which passes a resolution under
subsection (3).
(3) An existing public company may, by special resolution —
(a) resolve that this section shall apply to it; and
(b) alter the provisions of its memorandum and articles so that they
comply with this section.
(4) In subsection (2)(a), “existing public company” means a company which
was a public company immediately before the commencement of this
section.
(5) [Amends section 18 of the Companies Act 1931.]
30 Alternative designations

(1) A company which is required or entitled by any provision of the
Companies Acts 1931 to 1992 to include in its name, as its last part, any
of the words specified in subsection (4) may, instead of those words,
include as the last part of the name, the abbreviations there specified as
an alternative in relation to those words.
(2) Any reference in those Acts to the name of a company or to the inclusion
of any of those words in the name of the company includes a reference to
the name including (in place of any of the words so specified) the
appropriate alternative, or to the inclusion of the appropriate alternative,
as the case may be.
(3) A provision of those Acts requiring a company not to include any of
those words in its name also requires it not to include the abbreviated
alternative specified in subsection (4).
(4) For the purposes of this section —
(a) the alternative of “limited” is “Ltd.”;
(b) the alternative of “public limited company” is “P.L.C”‘.
31 Public companies: amendment of certain requirements

(1) (a) [Repeals section 38A of the Companies Act 1931.]
(b) [Amends section 41 of the Companies Act 1931.]
Companies Act 1992 Section 32


c AT 4 of 1992 Page 37

(c) [Amends section 95 of the Companies Act 1931.]
(d) and (e) [Repeal sections 112 and 139 respectively of the Companies
Act 1931.]
(f) [Amends section 165 of the Companies Act 1931.]
(2) to (4) [Amend sections 95, 162 and 164 respectively of the Companies Act
1931.]
(5) (a) [Amends section 2 of the Companies Act 1968.]
(b) [Repeals section 16 of the Companies Act 1974.]
(c) [Amends Schedule 1 to the Fines Act 1986.]
32 [Repealed]
28

33 Amendment of accounting requirements etc

(1) The Treasury may by order modify Schedule 1 to the Companies Act 1982.
(2) Without prejudice to the generality of that power an order under this
section may —
(a) impose new requirements with respect to the accounts of
companies, the notes to accounts and the documents required to
be annexed to the balance sheet of a company;
(b) prescribe formats for the accounts of companies;
(c) provide for exemptions from Part 1 and Schedule 1 of the
Companies Act 1982 in respect of specified classes of company or
business;
(d) apply as part of that Schedule statements of standard accounting
practice issued by such body or bodies as may be prescribed;
(e) make consequential modifications in the Companies Acts 1931 to
1992 and any other enactments relating to the accounts of
companies.
(3) Before making an order under this section the Treasury shall consult
with such bodies as appear to it to be representative of accountants in the
Island.
(4) An order under this section shall not come into operation unless it is
approved by Tynwald.
34 Amendments

(1) The amendments in Schedule 1, being amendments relating to the
companies registry, shall have effect.
(2) The amendments in Schedule 2, being amendments relating to the
administration of companies, shall have effect.
Section 35 Companies Act 1992


Page 38 AT 4 of 1992 c

(3) The amendments in Schedule 3, being amendments relating to written
resolutions of private companies, shall have effect.
(4) The amendments in Schedule 4, being amendments relating to
exemptions for private companies, shall have effect.
(5) The amendments in Schedule 5, being amendments relating to charitable
companies, shall have effect.
(6) The amendments in Schedule 6, being amendments of a miscellaneous
nature, shall have effect.
35 Repeals

The enactments mentioned in Schedule 7 are repealed to the extent specified in
the third column of that Schedule.
36 Short title and commencement

(1) This Act may be cited as the Companies Act 1992 and shall come into
operation on such day as may be appointed by order made by the
Treasury and different days may be appointed for different provisions or
different purposes.
(2) This Act shall be construed as one with the Companies Acts 1931 to 1986,
and those Acts and this Act may be cited together as the Companies Acts
1931 to 1992.
(3) An order bringing into force any provision may contain such transitional
provisions and savings as appear to the Treasury to be necessary or
expedient.29

Companies Act 1992 Schedule 1



c AT 4 of 1992 Page 39

Schedule 1

AMENDMENTS RELATING TO THE COMPANIES REGISTRY

Section 34(1)30

Schedule 2

AMENDMENTS RELATING TO THE ADMINISTRATION OF COMPANIES

Section 34(2)31

Transitional
24. Where a company was, immediately before the commencement of this
Schedule, in default with respect to the delivery of one or more annual returns, this
Schedule does not affect its obligation to make such a return (in accordance with
sections 107 to 110 of the 1931 Act as they then had effect) or any liability arising from
failure to do so.
Schedule 3

AMENDMENTS RELATING TO WRITTEN RESOLUTIONS OF PRIVATE

COMPANIES

Section 34(3)32

Schedule 4

AMENDMENTS RELATING TO EXEMPTIONS FOR PRIVATE COMPANIES

Section 34(4)33

Schedule 5

AMENDMENTS RELATING TO CHARITABLE COMPANIES

Section 34(5)34

Schedule 6

MISCELLANEOUS AMENDMENTS

Section 34(6)35

Schedule 7

REPEALS

Schedule 7
Companies Act 1992


Page 40 AT 4 of 1992 c

Section 3536

Companies Act 1992 Endnotes


c AT 4 of 1992 Page 41

ENDNOTES

Table of Legislation History

Legislation Year and No Commencement






Table of Renumbered Provisions

Original Current






Table of Endnote References

1
S 6 substituted by Companies (Amendment) Act 2009 s 21. 2
S 7 substituted by Companies (Amendment) Act 2009 s 21. 3
S 7A inserted by Companies (Amendment) Act 2009 s 21. 4
S 7B inserted by Companies (Amendment) Act 2009 s 21. 5
S 8 substituted by Companies (Amendment) Act 2009 s 21. 6
Subpara (ii) amended by Civil Partnership Act 2011 Sch 14. 7
S 8A inserted by Companies (Amendment) Act 2009 s 21. 8
Subs (1A) inserted by SD174/10. 9
Subs (1A) inserted by SD2014/0184. Editorial Note: Modification of s. 10 under
Article 13 of SD2014/0184 to be treated as an amendment. 10
Subs (3) substituted by SD2014/0184. Editorial Note: Modification of s. 10 under
Article 13 of SD2014/0184 to be treated as an amendment. 11
Subs (1) amended by Companies (Transfer of Functions) Act 2000 Sch 1, by
Companies, etc. (Amendment) Act 2003 Sch 1 and by SD155/10 Sch 2. 12
Subs (6) amended by Companies (Transfer of Functions) Act 2000 Sch 1 and by
SD155/10 Sch 2. 13
Subs (4) amended by Companies (Transfer of Functions) Act 2000 Sch 1 and by
SD155/10 Sch 2. 14
Para (a) amended by Companies (Transfer of Functions) Act 2000 Sch 1 and by
SD155/10 Sch 2. 15
Para (b) amended by Companies (Transfer of Functions) Act 2000 Sch 1 and by
SD155/10 Sch 2.
Endnotes Companies Act 1992


Page 42 AT 4 of 1992 c

16
Para (c) amended by Companies (Transfer of Functions) Act 2000 Sch 1 and by
SD155/10 Sch 2. 17
Definition of “distributable profits” amended by Companies (Amendment) Act 2009
s 22. 18
Subs (1) amended by SD155/10 Sch 2. 19
Subs (1) amended by SD155/10 Sch 2. 20
S 25A inserted by Companies (Amendment) Act 2009 s 24. 21
Subss (1) to (3) inclusive repealed by Company Officers (Disqualification) Act 2009
Sch 5 with savings see SD325/09. 22
Subs (4) amended by Companies (Transfer of Functions) Act 2000 Sch 2, by
Companies Act 2006 Sch 1, by SD155/10 Sch 2 and by SD2015/0090 as amended by
SD2015/0276. 23
S 26 amended by Company Officers (Disqualification) Act 2009 Sch 4. Subs (5)
repealed by Company Officers (Disqualification) Act 2009 Sch 5 with savings see
SD325/09. 24
S 27 repealed by Company Officers (Disqualification) Act 2009 Sch 5. 25
Para (a) amended by Collective Investment Schemes Act 2008 Sch 6. 26
Subs (1) amended by Companies (Transfer of Functions) Act 2000 Sch 2 and by
SD2015/0090 as amended by SD2015/0276. 27
Subs (3) amended by Companies (Transfer of Functions) Act 2000 Sch 2 and by
SD2015/0090 as amended by SD2015/0276. 28
S 32 repealed by Insider Dealing Act 1998 Sch 4. 29
ADO 1/10/199 (Ss 28 to 33. Ss 34 and 35, but only in respect of the paragraphs and
entries in Schs 1 to 7 referred to below.
S 36.
In Sch 1 - Paras 2, 4 to 7, 9 to 11, 13, 14 and 16.
In Sch 2 - Paras 1 to 4, 6, 7, 9 to 11, 15 to 17 and 20 to 23.
In Sch 3 - Paras 1 to 3.
In Sch 4 - Paras 1 to 3.
In Sch 5 - Paras 1 to 3.
In Sch 6 - Paras 1 to 16.
In Sch 7 - the entries relating to —
Registration of Business Names Act 1918,
ss 38A, 41, 42, 95, 96, 106, 112, 139, 140, 151, 165 and 319A of the Companies
Act 1931,
Prevention of Fraud (Investments) Act 1968,
Companies Act 1968,
Banking and Financial Dealings (Isle of Man) Act 1973,
Companies Act 1974,
Companies Act 1982, except the repeal relating to s 45(3) of the Companies Act 1931,
Treasury Act 1985,
Fines Act 1986, except the repeal relating to s 45(3) of the Companies Act 1931,
Treasury Act 1985,
Fines Act 1986, except the repeal relating to s 45(3) of the Companies Act 1931,
Companies Act 1992 Endnotes


c AT 4 of 1992 Page 43


s 35 of the Companies Act 1986,
Investment Business Act 1991.)
(GC348/92);
1/12/1992.
(Ss 1 to 5.
Ss 6 to 8, but only in respect of companies which are not restricted schemes or
authorised schemes within the meanings provided respectively by ss 11(5) and 31(1) of
the Financial Supervision Act 1988.
Ss 9 to 27.
Ss 34 and 35, but only in respect of the paras and entries in Schedules 1, 2 and 7
referred to below —
In Sch 1 - paras 3, 12 and 15.
In Sch 2 - paras 5 and 8.
In Sch 7 - the entries relating to —
s 45 of the Companies Act 1931,
the Companies Act 1982, the repeal relating to s 45(3) of the Companies Act 1931,
the Fines Act 1986, the repeal relating to s 45(3) of the Companies Act 1931,
but only in respect of companies which are not restricted schemes or authorised
schemes within the meanings provided respectively by ss 11(5) and 31(1) of the
Financial Supervision Act 1988.)
(GC437/92);
21/12/1992
(S 35 but only in respect of the entry in Sch 7 relating to s 53 of the Partnership Act
1909.)
(GC475/92);
1/11/1993
(S 34(1) - but only in respect of entry 8 in Sch 1.
In Sch 1 - entry 8.)
(SD341/93);
1/1/1994
Ss 34 and 35, but only in respect of entries in Schs 2 and 7 referred to below.
In Sch 2 - entries 12 to 14, 18, 19 and 24.
In Sch 7 - the entry relating to the Companies Act 1986.)
(SD418/93);
1/4/1994
(The rest of the provisions)
(SD88/94). 30
Sch 1 amended by Companies, etc. (Amendment) Act 2003 Sch 2, and amends the
following Acts - Companies Act 1931 q.v. - Companies Act 1961 q.v.
31
Sch 2 amended by Companies, etc. (Amendment) Act 2003 Sch 2, and amends the
following Acts —
Companies Act 1931 q.v.
Companies Act 1974 q.v.
Stock Exchange (Completion of Bargains) (Isle of Man) Act 1979 q.v.
Endnotes Companies Act 1992


Page 44 AT 4 of 1992 c


Companies Act 1982 q.v. 32
Sch 3 amends the following Act — Companies Act 1931 q.v. 33
Sch 4 amends the following Acts — Companies Act 1931 q.v. and Companies Act
1982 q.v. 34
Sch 5 amends the following Acts — Companies Act 1986 q.v. and Charities
Registration Act 1989 q.v.
35
Sch 6 amended by Companies, etc. (Amendment) Act 2003 Sch 2, and amends the
following Acts —
Registration of Business Names Act 1918 q.v.
Companies Act 1931 q.v.
Prevention of Fraud (Investments) Act 1968 q.v.
Banking and Financial Dealings (Isle of Man) Act 1973 q.v.
Companies Act 1982 q.v. 36
Sch 7 repeals the following Acts in part —
Partnership Act 1909
Registration of Business Names Act 1918
Companies Act 1931
Prevention of Fraud (Investments) Act 1968
Companies Act 1968
Banking and Financial Dealings (Isle of Man) Act 1973
Companies Act 1974
Companies Act 1982
Treasury Act 1985
Fines Act 1986
Companies Act 1986
Investment Business Act 1991.