S.L. 234.42 Art. 95Certain distributions prohibited.

(1) A company shall not make a distribution except out of profits available for the purpose.

(2) For the purposes of this Chapter, "distribution" means every description of distribution of a company’s assets to its members, whether in cash or otherwise, except distribution by way of -

(a) an issue of shares as fully or partly paid bonus shares;

(b) the redemption or purchase of any of the company’s own shares out of capital, including the proceeds of any fresh issue of shares, or out of undistributable reserves;

(c) the reduction of the issued share capital by extinguishing or reducing the liability of any of the members on any of the company’s shares in respect of issued share capital not paid up, or by paying off paid up issued share capital; and

(d) a distribution of assets to members of the company on its winding up.

(3) For the purposes of this Chapter, a company’s profits available for distribution shall be its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of issued share capital duly made.

(4) A company shall not apply an unrealised profit in paying up debentures, or any amounts unpaid on its issued share capital.