The following Corporate guidance note provides comprehensive and up to date legal information covering:
The law regulating the making of distributions by a company, as it applies to all companies, is set out in this Practice Note. For details of the additional rules and guidance that specifically apply to listed companies and AIM companies, see Practice Note: Dividends—listed and AIM companies.
’Distribution’ is given a very wide definition for the purpose of Part 23 of the Companies Act 2006 (CA 2006).
A distribution is every description of distribution of a company’s assets to its members, whether in cash or otherwise, except:
an issue of bonus shares (whether fully paid or partly paid), and
reductions of share capital
redemptions of shares
share buybacks, and
distributions of assets to members on the winding up of a company
There is no definition of 'asset' in CA 2006, although there is a definition of 'non-cash asset', being any property or interest in property other than cash. In CA 2006, 'cash' is expressed to include foreign currency.
A monetary payment or the transfer of a non-cash asset to a member for which no separate consideration is provided will normally be a distribution. However, there may be more difficulty in identifying a distribution if consideration is provided in relation to the payment or transfer.
A distribution has been found to be made on, eg:
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234