The Companies Act No. 17 of 2015Section 483 of The Companies Act No. 17 of 2015: Accounting consequences of payment out of capital
(1) This section applies if a payment out of capital is made in accordance with Division 4.
(2) If the permissible capital payment is less than the nominal amount of the shares redeemed or purchased, the company shall transfer an amount equal to the amount of the difference to the company's capital redemption reserve.
(3) If the permissible capital payment is greater than the nominal amount of the shares redeemed or purchased, the company can reduce—
(a) the amount of its capital redemption reserve, share premium account or fully paid share capital (if any); and
(b) any amount that represents unrealised profits of the company for the time being standing to the credit of any revaluation reserve maintained by the company, by an amount not exceeding (or by amounts in total not exceeding) the amount by which the permissible capital payment exceeds the nominal amount of the shares.
(4) If the proceeds of a fresh issue are applied by the company in making a redemption or purchase of its own shares in addition to a payment out of capital under this Division, the references in subsections (2) and (3) to the permissible capital payment refer to the aggregate of that payment and those proceeds.
(5) If a company fails to comply with subsection (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 five hundred thousand shillings.
(6) If, after a company or any of its officers is convicted of an offence under subsection (5), the company continues to fail to transfer the requisite amount to the company's capital redemption reserve, the company, and each officer of the company who is in default, commit a further offence on each day on which the failure continues and on conviction are each liable to a fine not exceeding fifty thousand shillings for each such offence.
Check the current authoritative text and amendment history before relying on this provision.
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