Hong Kong Ordinances

COMPANIES ORDINANCE - SECT 49A

Financing etc. of redemption

(1) Subject to subsection (2) and to sections 49I and 49P(4)-

   (a)  redeemable shares may only be redeemed out of distributable  profits
        of the company or out of the proceeds of a fresh issue of shares made
        for the purposes of the redemption; and

   (b)  any premium payable on redemption shall be paid out of
        distributable profits of the company.

(2) If the redeemable shares were issued at a premium, any premium payable on
their redemption may be paid out of the proceeds of a fresh issue of shares
made for the purposes of the redemption, up to an amount equal to-

   (a)  the aggregate of the premiums received by the company on the issue of
        the shares redeemed; or

   (b)  the current amount of the company's share premium account

(including any sum transferred to that account in respect of premiums on the
new shares), whichever is the less; and in that case the amount of the
company's share premium account shall be reduced by a sum corresponding (or by
sums in the aggregate corresponding) to the amount of any payment made by
virtue of this subsection out of the proceeds of the issue of the new shares.

(3) Subject to sections 49 to 49S, redemption of shares may be effected on
such terms and in such manner as may be provided by the company's articles. <* Note - Exp. X-Ref.: Sections 49, 49A, 49B, 49BA, 

49C, 49D, 49E, 49F, 49G, 49H, 49I, 49J, 49K, 49L, 49M, 49N, 49O, 49P, 49Q,
49R, 49S *>

(4) Shares redeemed under this section shall be treated as cancelled on
redemption, and the amount of the company's issued share capital shall be
diminished by the nominal value of those shares accordingly; but the
redemption of shares by a company is not to be taken as reducing the amount of
the company's authorized share capital.

(5) Without prejudice to subsection (4) and subject to subsection

(6), where a company is about to redeem shares, it has power to issue shares
up to the nominal value of the shares to be redeemed as if those shares had
never been issued.

(6) Where new shares are issued before the redemption of existing shares, the
new shares shall be deemed, so far as relates to the Eighth Schedule, not to
have been issued under subsection (5) unless the existing shares are redeemed
within 1 month of the issue of the new shares. (Added 77 of 1991 s. 4) [cf.
1985 c. 6 s. 160 U.K.]