Section 670 | Public companies: general rule against lien or charge on own shares

(1)A lien or other charge of a public company on its own shares (whether taken expressly or otherwise) is void, except as permitted by this section.

(2)In the case of any description of company, a charge is permitted if the shares are not fully paid up and the charge is for an amount payable in respect of the shares.

(3)In the case of a company whose ordinary business—

(a)includes the lending of money, or

(b)consists of the provision of credit or the bailment (in Scotland, hiring) of goods under a hire-purchase agreement, or both,

a charge is permitted (whether the shares are fully paid or not) if it arises in connection with a transaction entered into by the company in the ordinary course of that business.

(4)In the case of a company that has been re-registered as a public company, a charge is permitted if it was in existence immediately before the application for re-registration.