Companies Act 2006, section 829

Meaning of “distribution”

Part 23 Distributions

(1) In this Part “distribution” means every description of distribution of a company's assets to its members, whether in cash or otherwise, subject to the following exceptions.

(2)The following are not distributions for the purposes of this Part—

(a)an issue of shares as fully or partly paid bonus shares;

(b)the reduction of share capital—

(i)by extinguishing or reducing the liability of any of the members on any of the company's shares in respect of share capital not paid up, or

(ii)by repaying paid-up share capital;

(c)the redemption or purchase of any of the company's own shares out of capital (including the proceeds of any fresh issue of shares) or out of unrealised profits in accordance with Chapter 3, 4 or 5 of Part 18;

(d)a distribution of assets to members of the company on its winding up.

Read section 829 in the full Act → Definitions (5) Cases (16)

Definitions used in section 829

company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
member

(2) In sub-paragraph (1) “member” has the same meaning as it has by virtue of section 7(1) of that Act .

Defined in Sch.2 Pt.1 · see it in the full Act
cash

For this purpose “cash” includes foreign currency.

Defined in s.1163(1) · see it in the full Act
share

(1) In the Companies Acts “share”, in relation to a company, means share in the company's share capital.

Defined in s.540(1) · see it in the full Act
profits

(a)are to profits or losses of that description made at any time, and

Defined in s.853(2) · see it in the full Act

Cases considering section 829 (16)

Henderson and Jones Limited v David Jason Ross & Ors.

[2023] EWHC 1276 (Ch) · 26 May 2023Defines

The court relied on the broad statutory definition of distribution in assessing whether the restructuring transactions involved a distribution of company assets. (see paras [384]-[386])

MANOLETE PARTNERS PLC v PAUL ANTHONY RUTTER & Anor

[2022] EWHC 2552 (Ch) · 7 October 2022Interprets

Interprets “distribution” broadly as every description of distribution of company assets to members, including a genuine accounting allocation of a dividend against a shareholder-director’s loan debt without cash movement or a later ledger entry. The July 2016 transaction therefore constituted a distribution. (see paras [99]-[109])

SSF Realisations Ltd v Loch Fyne Oysters Ltd & Ors

[2020] EWHC 3521 (Ch) · 21 December 2020Defines

The court interpreted a distribution as any description of distribution of company assets to members and applied that definition to characterise the management charge as a voluntary distribution. (see paras [53]-[55], [71]-[82])

What each judgment says about section 829 is in the case-law panel in the full Act.

Amendments and notes

1 notes from legislation.gov.uk

Commencement

  1. I290S. 829 wholly in force at 6.4.2008; s. 829 not in force at Royal Assent see s. 1300; s. 829 in force at 6.4.2008 by S.I. 2007/3495, art. 3(1)(k) (with savings in arts. 7, 12 and subject to transitional adaptations in Sch. 1 paras. 14-20 and with savings in Sch. 4 paras. 33-35) this amendment is subject to savings and/or transitional provisions, see the commentary.