Acquisition of own shares

(1) Subject to any limitations in its Memorandum or Articles, a company incorporated under this Act may purchase, redeem or otherwise acquire and hold its own shares but only out of surplus or in exchange for newly issued shares of equal 40 (2) No purchase, redemption or other acquisition permitted under sub-section (1), shall be made unless the directors determine that immediately after the purchase, redemption or other acquisition– (a) the company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and (b) the realisable value of the assets of the company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital, and, in the absence of fraud, the decision of the directors as to the realisable value of the assets of the company is conclusive, unless a question of law is involved. (3) A determination by the directors under sub-section (2), is not required where shares are purchased, redeemed or otherwise acquired– (a) pursuant to a right of a member to have his shares redeemed or to have his shares exchanged for money or other property of the (b) by virtue of a transfer of capital pursuant to section 38(1)(b)(iii); (c) by virtue of the provisions of section 91; and (d) pursuant to an order of the court. (4) Subject to any limitations in the Memorandum or Articles, shares that a company purchases, redeems or otherwise acquires may be cancelled or held as treasury shares unless the shares are purchased, redeemed or otherwise acquired by virtue of a reduction in capital in a manner that would be a International Business Companies[CAP. 270 41 contravention of the requirements of section 38 (3), in which case they shall be cancelled but they shall be available for reissue; and upon the cancellation of a share, the amount included as capital of the company with respect to that share shall be deducted from the capital of the company.