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Companies Act, 1973 (Act No. 61 of 1973)

Chapter V: Share capital, Acquisition by Companies of own Shares, Shares, Allotment and Issue of Shares, Members and Register of Members, Debentures, Transfers, and Restrictions on Offering Shares for Sale

Share capital

76. Premiums received on issue of shares to be share capital, and limitation on application thereof

 

 

1) Where a company which is not a banking institution in terms of the Banks Act, 1990 (Act No. 94 of 1990), issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to an account to be called the "share premium account", and the provisions of this Act relating to the reduction of the share capital of a company shall, except as provided in this section, apply as if the share premium account were paid-up share capital of the company.

 

2) Where assets are acquired by the issue of shares of a company and no consideration is recorded, the assets so acquired shall be valued and if the value of the assets is more than the par value of such shares, the difference between the par value of the shares and the value of the assets so acquired shall be transferred to the share premium account.

 

3) The share premium account may, notwithstanding anything contained in subsection (1), be applied by the company-
a) in paying up unissued shares of the company to be issued to members of the company as fully paid capitalisation shares;
b) in writing off-
i) the preliminary expenses of the company; or
ii) the expenses of, or the commission paid or discount allowed on, the creation or issue of any shares of the company;
c) in providing for the premium payable on redemption of any redeemable preference shares of the company: Provided that-
i) such premium shall not be so provided unless it is payable according to the terms of issue of the shares concerned and such terms have been embodied in the articles of the company as from a date prior to the date on which such shares were allotted and issued or on such later date as may be allowed by the Court on application to it;
ii) in the case of ordinary shares which are converted into redeemable preference shares redeemable at a premium, only that portion of the amount standing to the credit of the share premium account which arose on the original issue of such shares may be applied in providing for the premium payable on redemption;
iii) the provisions of paragraphs (i) and (ii) of this proviso shall not apply in respect of redeemable preference shares issued before the commencement of the Companies Amendment Act, 1992; or
d) for the payment of the premium over the par value in the case of an acquisition of shares in accordance with section 85.

 

4) This section shall as from six months after the date of its commencement apply to any company in respect of any balance of share premiums as at the said commencement date which arose from the issue of shares at a premium before the first day of January, 1953.

 

5) This section shall also apply to any company in respect of any balance of share premiums which arose from the issue of shares on or after 1 January 1953.