D5.129 Bonus issues following a repayment of share capital (paragraph H)
There are several types of distributions as detailed in D5.102, the final type listed is where there is a bonus issue following a repayment of share capital; these may be treated as distributions under paragraph H of CTA 2010, s 1000(1).
Without the rules under paragraph H, a company could return value to a shareholder with no distribution by repaying share capital and then issuing bonus shares to the same value as the repayment, the paragraph H rules prevent this and are set out below.
Where a company repays share capital, other than certain preference shares (see below) and simultaneously or subsequently issues bonus shares (of the same or a different class), that issue will normally give rise to a distribution. However, this is only to