Section 733

In the following circumstances a company must transfer amounts to a reserve, called the “capital redemption reserve”. Where under this Part shares of a limited company are redeemed or purchased wholly out of the company's profits, the amount by which the company's issued share capital is diminished in accordance with— must be transferred to the capital redemption reserve. section 688(b) (on the cancellation of shares redeemed), or section 706(b)(ii) (on the cancellation of shares purchased), If— the amount of the difference must be transferred to the capital redemption reserve. the shares are redeemed or purchased wholly or partly out of the proceeds of a fresh issue, and the aggregate amount of the proceeds is less than the aggregate nominal value of the shares redeemed or purchased, This does not apply in the case of a private company if, in addition to the proceeds of the fresh issue, the company applies a payment out of capital under Chapter 5 or under section 692(1ZA) in making the redemption or purchase. The amount by which a company's share capital is diminished in accordance with section 729(4) (on the cancellation of shares held as treasury shares) must be transferred to the capital redemption reserve. The company may use the capital redemption reserve to pay up new shares to be allotted to members as fully paid bonus shares. Subject to that, the provisions of the Companies Acts relating to the reduction of a company's share capital apply as if the capital redemption reserve were part of its paid up share capital.

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Source: legislation.gov.uk · retrieved 2026-09-04