Section 1023 | Exceptions to section 1022(3)

(1)Section 1022(3) does not apply if the issue of share capital mentioned in section 1022(1)(b)—

(a)takes place more than 10 years after the repayment of share capital mentioned in subsection 1022(1)(a), and

(b)is not of redeemable share capital.

(2)But subsection (1) does not prevent section 1022(3) from applying in the case of a company which is a relevant company for the purposes mentioned in section 739 (certain companies not included in the official UK list etc).

(3)Section 1022(3) does not apply if the repaid share capital consists of fully paid preference shares and—

(a)those shares were issued as fully paid preference shares,

(b)they were issued wholly for new consideration not derived from ordinary shares, and

(c)throughout the period from their issue until the repayment those shares continued to be fully paid preference shares.

(4)For the purposes of subsection (3) consideration is derived from ordinary shares if (and only if)—

(a)it consists of the surrender, transfer or cancellation of ordinary shares,

(b)it consists of the variation of rights in ordinary shares, or

(c)it is derived from a repayment of share capital paid in respect of ordinary shares,

and for the purposes of this subsection it does not matter whether the ordinary shares are of the company or another company.

(5)In this section—

“ordinary shares” means shares other than preference shares, and

“preference shares” means shares which—

(a)do not carry any right to dividends other than dividends at a fixed rate per cent of the nominal value of the shares, and

(b)carry rights in respect of dividends and capital which are comparable with those general for fixed-dividend shares included in the official UK list.