Section 482 of The Companies Act No. 17 of 2015: Company whose shares are redeemed or purchased to transfer amount to capital redemption reserve
(1) In this section, “capital redemption reserve”, in relation to a company, means the reserve referred to in subsection (2).
(2) If under this Part or Part XX, shares of a limited company are redeemed or purchased wholly out of the company’s profits, the company shall transfer to a reserve an amount equal to the amount by which the company’s issued share capital is diminished in accordance with section 463 or 524.
(3) If—
(a) the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue; and
(b) the aggregate amount of the proceeds is less than the aggregate nominal value of the shares redeemed or purchased, the company shall transfer to the capital redemption reserve an amount equal to the difference.
(4) Subsection (3) does not apply to a private company that, in addition to the proceeds of the fresh issue, applies a payment out of capital in accordance with Division 4 in making the redemption or purchase.
(5) If a company's share capital is diminished in accordance with section 524, the company shall transfer to its capital redemption reserve an amount equal to that by which the company's share capital is diminished.
(6) A company may use its capital redemption reserve to pay up new shares that are to be allotted to members as fully paid bonus shares.
(7) Subject to subsection (6), the provisions of this Act relating to the reduction of a company's share capital apply as if the capital redemption reserve were part of its paid up share capital.
(8) If a company fails to comply with subsection (1) or (2), the company, and each officer of the company who is in default, commit an offence and on conviction are each liable to a fine not exceeding one million shillings.
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