(1) Subject to this section, a company limited by shares or limited by guarantee and having a share capital may, if authorised to do so by its articles of association, issue shares which are to be redeemed or are liable to be redeemed at the option of the company or the shareholder and, for the avoidance of doubt, it shall be lawful for the rights attaching to any shares to be varied, subject to the provisions of the company’s articles of association, so as to provide that such shares are to be or are liable to be so redeemed. Redemption and purchase of shares (2) Subject to this section, a company limited by shares or limited by guarantee and having a share capital may, if authorised to do so by its articles of association, purchase its own shares, including any redeemable shares. (3) (a) No share may be redeemed or purchased unless it is fully paid. (b) A company may not redeem or purchase any of its shares if, as a result of the redemption or purchase, there would no longer be any issued shares of the company other than shares held as treasury shares. (c) Redemption or purchase of shares may be effected in such manner and upon such terms as may be authorised by or pursuant to the company’s articles of association. (d) If the articles of association do not authorise the manner and terms of the purchase, a company shall not purchase any of its own shares unless the manner and terms of purchase have first been authorised by a resolution of the company. (da) For the avoidance of doubt - (i) a company’s articles of association; or (ii) a resolution of the company, may authorise the company’s directors to determine the manner or any of the terms of, any such redemption or purchase not being inconsistent with such articles of association or resolution and subject to such restrictions (if any) as may be provided therein. (e) The premium, if any, payable on redemption or purchase must have been provided for - 33 Companies Law (2012 Revision) (i) out of either or both of the profits of the company or the company’s share premium account, before or at the time the shares are redeemed or purchased; or (ii) in the manner provided for in subsection (5). (f) Shares may be redeemed or purchased out of profits of the company, out of the share premium account or out of the proceeds of a fresh issue of shares made for the purposes of the redemption or purchase or in the manner provided for in subsection (5). (g) Subject to section 37A, shares redeemed or purchased under this section shall be treated as cancelled on redemption or purchase, and the amount of the company’s issued share capital shall be diminished by the nominal value of those shares accordingly; but the redemption or purchase of shares by a company is not to be taken as reducing the amount of the company’s authorised share capital. (h) Without prejudice to paragraph (g), where a company is about to redeem or purchase shares, it has power to issue shares up to the nominal value of the shares to be redeemed or purchased as if those shares had never been issued: Provided that where new shares are issued before the redemption or purchase of the old shares the new shares shall not, so far as relates to fees payable on o r accompanying the filing of any return or list, be deemed to have been issued in p ursuance of this subsection if the old shares are redeemed or purchased within one month after the issue of the new shares. (4) (a) Where, under this section, shares of a company are redeemed or purchased wholly out of either or both of the company’s profits or share premium account, the amount by which the company’s issued share capital is diminished in accordance with paragraph (g) of subsection (3) on cancellation of the shares redeemed or purchased shall be transferred to a reserve called the “capital redemption reserve” and the share premium account or company’s profits, as the case may be, shall be adjusted accordingly. (b) If the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds is less than the aggregate nominal value of the shares redeemed or purchased, the amount of the difference shall be transferred to the capital redemption reserve. (c) Paragraph (b) does not apply if the proceeds of the fresh issue are applied by the company in making a redemption or purchase of 34 Companies Law (2012 Revision) its own shares in addition to a payment out of capital under subsection (5). (d) The provisions of this Law relating to the reduction of a company’s share capital apply as if the capital redemption reserve were paid-up share capital of the company, except that the reserve may be applied by the company in paying up its unissued shares to be allotted to members of the company as fully paid bonus shares. (5) (a) Subject to this section, a company limited by shares or limited by guarantee and having a share capital may, if so authorised by its articles of association, make a payment in respect of the redemption or purchase of its own shares otherwise than out of its profits, share premium account, or the proceeds of a fresh issue of shares. (b) References in subsections (6) to (9) to payment out of capital are, subject to paragraph (f), references to any payment so made, whether or not it would be regarded apart from this subsection as a payment out of capital. (c) The amount of any payment which may be made by a company out of capital in respect of the redemption or purchase of its own shares is such an amount as, taken together with - (i) any profits and share premium of the company being applied for purposes of the redemption or purchase; and (ii) the proceeds of any fresh issue of shares made for the purpose of the redemption or purchase, is equal to the price of redemption or purchase, and the payment out of capital permitted under this paragraph is referred to in subsections (6) to (9) as the capital payment for the shares. Nothing in this paragraph shall be taken to imply that a company shall be obliged to exhaust any profits and share premium before making any capital payment. (d) Subject to paragraph (f), if the capital payment for shares redeemed or purchased and cancelled is less than their nominal amount, the amount of the difference shall be transferred to the company’s capital redemption reserve. (e) Subject to paragraph (f), if the capital payment is greater than the nominal amount of the shares redeemed or purchased the amount of any capital redemption reserve or fully paid share capital of the company may be reduced by a sum not exceeding, or by sums not in the aggregate exceeding, the amount by which the capital payment exceeds the nominal amount of the shares. (f) Where the proceeds of a fresh issue are applied by a company in making any redemption or purchase of its own shares in addition 35 Companies Law (2012 Revision) to a payment out of capital under this subsection, the references in paragraphs (d) and (e) to the capital payment are to be read as referring to the aggregate of that payment and those proceeds. (6) (a) A payment out of capital by a company for the redemption or purchase of its own shares is not lawful unless immediately following the date on which the payment out of capital is proposed to be made the company shall be able to pay its debts as they fall due in the ordinary course of business. (b) The company and any director or manager thereof who knowingly and wilfully authorises or permits any payment out of capital to effect any redemption or purchase of any share in contravention of paragraph (a) commits an offence and is liable on summary conviction to a fine of fifteen thousand dollars and to imprisonment for five years. (7) (a) Where a company is being wound up and, at the commencement of the winding up, any of its shares which are or are liable to be redeemed have not been redeemed or which the company has agreed to purchase have not been purchased, the terms of redemption or purchase may be enforced against the company, and when shares are redeemed or purchased under this subsection they shall be treated as cancelled: Provided that this paragraph shall not apply if- (i) the terms of redemption or purchase provided for the redemption or purchase to take place at a date later than the date of the commencement of the winding up; or (ii) during the period beginning with the date on which the redemption or purchase was to have taken place and ending with the commencement of the winding up the company could not, at any time, have lawfully made a distribution equal in value to the price at which the shares were to have been redeemed or purchased. (b) There shall be paid in priority to any amount which the company is liable by virtue of paragraph (a) to pay in respect of any shares- (i) all other debts and liabilities of the company (other than any due to members in their character as such); and (ii) if other shares carry rights whether as to capital or as to income which are preferred to the rights as to capital attaching to the first mentioned shares, any amount due in satisfaction of those preferred rights, but subject to that, any such amount shall be paid in priority to any amounts due to members in satisfaction of their rights (whether as to capital or income) as members. 36 Companies Law (2012 Revision) (8) (a) Any redeemable preference shares issued by a company before the 18th day of January, 1988, are subject to redemption in accordance with this section. (b) Any capital redemption reserve fund established by a company before the 18th day of January, 1988, is to be known as the company’s capital redemption reserve and to be treated as if it had been established for the purposes of subsection (4), and accordingly, a reference in any law, the articles of association of any company or any other instrument to a company’s capital redemption reserve fund is to be construed as a reference to the company’s capital redemption reserve. (9) This section shall apply to shares without nominal or par value, and shall, in relation to such shares, be read and construed as if- (a) in subsection (3)- (i) for the words “the nominal value of” appearing in paragraph (g), there were substituted the words “an amount equal to the consideration received for”; and (ii) for the words “nominal value” appearing in paragraph (h), there was substituted the word “number”; (b) in subsection (4) for the words “aggregate nominal value of” appearing in paragraph (b), there were substituted the words “aggregate consideration received for”; and (c) in subsection (5)- (i) for the words “their nominal amount” appearing in paragraph (d), there were substituted the words “the consideration received for such shares”; and (ii) for the words “nominal amount of” appearing in paragraph (e), there were substituted the words “consideration received for”. 37A. (1) Shares that have been purchased or redeemed by a company or surrendered to the company pursuant to sections 37 or 37B shall not be treated as cancelled pursuant to sections 37(3)(g) or 37B(2) but shall be classified as treasury shares and sections 37(4), 37(5)(d) and 37B(2) shall not apply to such shares at the time of such purchase, redemption or surrender, if - Treasury shares (a) the memorandum and articles of association of the company do not prohibit it from holding treasury shares; (b) the relevant provisions of the memorandum and articles of association (if any) are complied with; and (c) the company is authorised in accordance with the company’s articles of association or by a resolution of the directors to hold such shares in the name of the company as treasury shares prior to the purchase, redemption or surrender of such shares. 37 Companies Law (2012 Revision) (2) Shares held by a company pursuant to subsection (1) shall continue to be classified as treasury shares until such shares are either cancelled or transferred pursuant to subsection (3). (3) A company that holds treasury shares may at any time - (a) cancel the shares in accordance with the provisions of the company’s articles of association or (in the absence of any applicable provisions in the Company’s articles of association) by a resolution of the directors, and if so cancelled the amount of the company’s issued share capital shall be diminished by the nominal or par value of those shares accordingly but the company’s authorised share capital shall not be reduced and sections 37(4), 37(5)(d) and 37B(2) shall apply as if the shares had been purchased, redeemed or surrendered as at the date of cancellation; or (b) transfer the shares to any person, whether or not for valuable consideration (including at a discount to the nominal or par value of such shares). (4) A sum equal to the consideration (if any) received by the company pursuant to the transfer of a treasury share made in accordance with subsection (3)(b) (such consideration referred to as the “transfer consideration”) shall be applied in the following manner - (a) to the extent that any payment out of capital was made with respect to the purchase or redemption of the share being transferred, there shall be credited to the company’s share capital an amount equal to the lesser of - (i) the amount of such payment out of capital; and (ii) the transfer consideration received in respect of such share; (b) subject to subsection (5), to the extent that any payment out of share premium was made with respect to the purchase or redemption of the share being transferred, there shall be credited to the company’s share premium an amount equal to the lesser of (i) the amount of such payment out of share premium; and (ii) the balance of the transfer consideration received in respect of such share after applying subsection (4)(a); and (c) subject to subsection (5), the balance of the transfer consideration received in respect of such share after applying subsection (4)(a) and (b) shall be credited to the company’s profit and loss account. (5) Notwithstanding the provisions of subsection (4)(b) and (c) but subject to subsection (4)(a), so long as the company shall be able to pay its debts as they fall due in the ordinary course of business immediately following the transfer of a treasury share in accordance with subsection (3)(b), the directors may by 38 Companies Law (2012 Revision) resolution determine that all or any part of the transfer consideration received shall be transferred to the company’s profit and loss account, share premium account or share capital (or any combination of the foregoing) in such proportions as the directors may (in their sole and absolute discretion but subject to any express contrary provision in the articles of association of the company) determine. (6) Notwithstanding subsection (7)(b), a treasury share may be transferred by the company and the provisions of this Law and (subject to any specific provisions with respect to the transfer of treasury shares) the memorandum and articles that apply to the transfer of shares shall apply to the transfer of treasury shares. (7) For so long as a company holds treasury shares - (a) the company shall be entered in the register of members as holding those shares; (b) notwithstanding paragraph (a) - (i) the company shall not be treated as a member for any purpose and shall not exercise any right in respect of the treasury shares, and any purported exercise of such a right shall be void; and (ii) a treasury share shall not be voted, directly or indirectly, at any meeting of the company and shall not be counted issued shares at any given time, whether for the purposes of the company’s articles of association or this Law; and (c) no dividend may be declared or paid, and no other distribution (whether in cash or otherwise) of the company’s assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of a treasury share. (8) Nothing in subsection (7) prevents an allotment of shares as fully paid bonus shares in respect of a treasury share and shares allotted as fully paid bonus shares in respect of a treasury share shall be treated as treasury shares. 37B. (1) Subject to any express provisions of the company’s memorandum or articles of association to the contrary, a company may accept the surrender for no consideration of any fully paid share (including a redeemable share) unless, as a result of the surrender, there would no longer be any issued shares of the company other than shares held as treasury shares. Surrender of shares (2) Subject to section 37A, any shares surrendered under subsection (1) shall be treated as cancelled on surrender, and the amount of the company’s issued share capital shall be diminished by the nominal value of those shares 39 Companies Law (2012 Revision) accordingly; but the surrender of shares by a member is not to be taken as reducing the amount of the company’s authorised share capital. (3) This section is without prejudice to any right or power of a company arising under this Law or otherwise to accept the surrender of a share (not being a fully paid share) in lieu of forfeiture.