35. Limited Liability

(1) The Liability of a Shareholder of a Company is limited to the amount (if any) that remains unpaid on the Shares held by the Shareholder.

(2) A reference to a Private Company or a Public Company includes a reference to a Company Limited by Shares incorporated in accordance with the AIFC Rules on Registration and Recognition of the Astana International Financial Centre Participants 2017.

36. Requirements for Public and Private Companies

(1) A Private Company must:

• (a) have at least 1 Shareholder; and
• (b) not be a Public Company.

(2) A Public Company:

• (a) is not prohibited under section 50 (Prohibition of public offers by Private Companies) from making an offer of its Securities to the Public; and
• (b) must have the share capital required by section 43 (Minimum share capital); and
• (c) must have at least 1 Shareholder, but may otherwise have any number of Shareholders.

37. Name of Private Company

(1) A Private Company must use only the name of the Company entered in the Register, and must ensure that, whenever it uses that name, the name is immediately followed by the word ‘Limited’ or the abbreviation ‘Ltd.’.

(2) Contravention of this section is punishable by a fine.

38. Name of Public Company

(1) A Public Company must use only the name of the Company entered in the Register and must ensure that, whenever it uses that name, the name is immediately followed by the words ‘Public Limited Company’ or the abbreviation ‘PLC’ or ‘plc’.

(2) Contravention of this section is punishable by a fine.

39. Re-registration of Public Company as Private Company

(1) A Public Company may be re-registered as a Private Company if:

• (a) a Special Resolution that it should be so re-registered is passed; and
• (b) either:

(i) no application has been made under subsection (2); or

(ii) an application has been made subsection (2) and an order has been made by the Court confirming the Special Resolution; and

• (c) an application for re-registration is delivered to the Registrar that includes, or is accompanied by:

(i) a statement of the Company’s proposed name on re-registration; and

(ii) a copy of the Special Resolution that the Company be re-registered as a Private Company; and

(iii) a copy of the Articles of Association as proposed to be amended; and

(iv) a written legal opinion from the Company’s external legal adviser stating that the proposed amendments of the Articles of Association comply with the requirements of these Regulations and any other applicable AIFC Regulations and AIFC Rules.

(2) The holders of not less in the aggregate than 5% of the nominal value of the Shares, or not fewer than 10 Shareholders, of the Company who did not vote in favour of the Special Resolution may apply to the Court, within 28 days after the day the Resolution is passed, to have the Resolution set aside on the ground that their interests would be unfairly prejudiced if the Resolution were not set aside.

(3) If an application is made to the Court under subsection (2), the Court may:

• (a) dismiss it, if no grounds are found that the rights of Persons making the application are adversely affected; or
• (b) confirm the Special Resolution; or
• (c) impose conditions that need to be met before the Company can be registered as a Private Company; or
• (d) set the Special Resolution aside.

(4) If an application is made to the Court under subsection (2), the Registrar must not re-Register the Public Company as a Private Company, until the application has been finally dealt with by the Court.

(5) If the Registrar is satisfied that the Company meets the requirements under this section to be re-registered as a Private Company, the Registrar must re-register the Company accordingly. If the Registrar re-registers the Company, the Registrar must issue an appropriate certificate of conversion that states the date that the certificate was issued.

(6) On issue of the certificate of conversion, the Company becomes a Private Company and the proposed changes in the Company’s name and Articles of Association, as included in or accompanying its application for re-registration, take effect.

40. Re-registration of Private Company as Public Company

(1) A Private Company may be re-registered as a Public Company if:

1. (a) a Special Resolution that it should be so re-registered is passed; and
2. (b) it has a share capital that meets the share capital requirements under section 43 (Minimum share capital) for a Public Company; and
3. (c) the requirements under subsection (2) and, if applicable, the requirements under subsection (3) are met; and
4. (d) an application for re-registration is delivered to the Registrar that includes or is accompanied by:
5. (i) a statement of the Company’s proposed name on re-registration; and

(ii) a copy of the Special Resolution that the Company be re-registered as a Public Company; and

(iii) a copy of the Articles of Association as proposed to be amended; and

(iv) if subsection (3) applies, a copy of the relevant valuation report required under section 46 (Non-cash consideration for Shares in Public Company); and

1. (v) a written legal opinion from the Company’s external legal adviser stating that the proposed amendments to the Articles of Association comply with the requirements of these Regulations, the Rules and all other applicable AIFC Regulations and AIFC Rules.

(2) Before applying to re-register as a Public Company, the Company must obtain:

1. (a) a balance sheet prepared as at a date (the balance sheet date) not more than 7 months before the day the application is delivered to the Registrar; and
2. (b) an unqualified report by the Company’s auditors that the balance sheet has been prepared in accordance with the accounting principles or standards prescribed by the Rules or otherwise approved by the Registrar; and
3. (c) a Written statement by the Company’s auditors that, in their opinion, the amount of the Company’s net assets at the balance sheet date was not less than the aggregate of the Company’s share capital and its reserves.

(3) If Shares are allotted by the Company in the period between the balance sheet date and the passing of the Special Resolution that the Company be re-registered as a Public Company, and the Shares are Paid-up otherwise than in cash, the Company must (unless the allotment is in connection with a Share exchange) comply with the requirements of section 46 (Non-cash consideration for Shares in Public Company) in respect of the Allotment.

(4) For this section, Shares are allotted by a Company in connection with a Share exchange if:

1. (a) the consideration for the Allotment is the transfer of Shares in another Body Corporate or the cancellation of Shares in another Body Corporate, and the Allotment is open to all holders (or all of a particular class of holders) of Shares in the other Body Corporate; or
2. (b) there is a proposed merger with another Body Corporate under which the Company proposes to acquire all the assets and Liabilities of the other Body Corporate in exchange for the issue of its Shares or other Securities to the shareholders or members of the other Body Corporate.

(5) If the Registrar is satisfied that a Private Company that has applied under this section to be re-registered as a Public Company meets the requirements to be re-registered as a Public Company, the Registrar must re-register the Company accordingly. If the Registrar re-registers the Company, the Registrar must issue an appropriate certificate of conversion that states the date that the certificate was issued.

(6) On issue of the certificate of conversion, the Company becomes a Public Company and the proposed changes in the Company’s name and Articles of Association, as included in or accompanying its application for re-registration, take effect.

(7) In this section: auditor means a Person who is registered by the Registrar as an auditor under these Regulations.

41. Shareholders

(1) The Incorporators of a Company are taken to have agreed to become Shareholders of the Company and, on the registration of the Company, must be entered as Shareholders in the Company’s Register of Shareholders.

(2) A Person other than an Incorporator may become a Shareholder in the Company by:

• (a) agreeing to become a Shareholder in the Company; and
• (b) acquiring a Share in the Company; and
• (c) having the Person’s name entered in the Company’s Register of Shareholders.

42. Nature of Shares

(1) Subject to the Articles of Association and the terms of their issue, each Share must:

• (a) give the right to vote at a meeting of the Company; and
• (b) represent a proportionate interest in the Company; and
• (c) rank, if fully Paid-up, in all respects equally with each other Share of the same class of Shares in the Company.

(2) Subject to section 54 (Transfer and registration of Shares and Debt Securities), the Shares or other interests of a Shareholder of a Company are transferable in the way provided in its Articles of Association.

(3) A Company may create different classes of Shares to the extent permitted by its Articles of Association.

43. Minimum share capital

(1) Each Share in a Company must have a fixed nominal value. A Share may not be allotted by a Company at less than its nominal value. An Allotment of a Share that does not have a fixed nominal value, or is Allotted at less than its nominal value, is void.

(2) A Private Company must have no minimum share capital.

(3) A Public Company:

1. (a) must have an allotted share capital (excluding treasury Shares) of no less than U.S. $100,000 at any time; and
2. (b) must not allot a Share except as Paid-up at least as to 1/4 of its nominal value.

(4) Subsection (3)(b) does not apply to Shares allotted under an Employee Share Scheme.

44. Alteration of share capital

(1) A Company may, by Resolution, alter its share capital, unless the alteration is prohibited by its Articles of Association or results in the Company not having the share capital required by section 43 (Minimum share capital).

(2) A Company may:

1. (a) increase its share capital by creating new Shares of an existing class with the same nominal value, or a new class of Shares of the nominal value it considers appropriate; or
2. (b) consolidate and divide its share capital (whether allotted or not) into Shares representing a larger nominal value than their existing nominal value; or
3. (c) subdivide its Shares, or any of them, into Shares representing a smaller nominal value than their existing nominal value, if the proportion between the amount paid and the amount unpaid (if any) on each subdivided Share is the same as it was for the Share from which the sub-divided Share was derived.

(3) A Company must not alter its share capital:

1. (a) otherwise than by Resolution or decision of the board of Directors subject to subsection (5) below; or
2. (b) if the alteration, or any alteration of its share capital, is prohibited by its Articles of Association; or
3. (c) if the alteration would result in the Company not having the share capital required by section 43 (Minimum share capital).

(4) Contravention of subsection (3) is punishable by a fine

(5) Subject to section 48 (Shareholders’ pre-emption rights), the board of Directors of a Company may, if authorised by the Articles of Association or Resolution, exercise a power of the Company:

1. (a) to allot and issue Shares; or
2. (b) to grant rights to subscribe for or convert any Securities into Shares.

45. Non-cash consideration for Shares in Private Company

(1) A Private Company must not, except as provided under subsection (2), allot Shares as Paid-up (in part or in full) other than for cash consideration.

(2) If a Private Company allots Shares for consideration other than cash, the board of Directors of the Company must:

1. (a) determine the reasonable cash value of the consideration for the Shares; and
2. (b) resolve that, in its opinion, the consideration for the Shares is fair and reasonable to the Company and to all existing Shareholders; and
3. (c) resolve that, in its opinion, the present cash value of the consideration to be provided for the Shares is not less than the nominal value to be credited for the issue of the Shares; and
4. (d) submit a copy of the relevant resolutions to the Registrar along with the notice of the Allotment.

(3) The resolutions required under subsection (2) must describe the consideration in sufficient detail and the present cash value of the consideration, as determined by the board of Directors, and the basis of the board’s valuation.

(4) This section does not apply to:

1. (a) the Allotment of Shares in a Company on the conversion of any convertible Securities; or
2. (b) the exercise of an option to acquire Shares in a Company; or
3. (c) the Allotment of Shares that are fully Paid-up from the reserves of a Company to all Shareholders in proportion to the number of Shares held by each Shareholder; or
4. (d) the consolidation and division, or subdivision, of Shares, or any class of Shares, in a Company in accordance with section 44(2)(b) (Alternation of share capital).

46. Non-cash consideration for Shares in Public Company

(1) A Public Company must not allot Shares as Paid-up (in part or in full) cash unless:

1. (a) the Company has obtained an independent valuation of the consideration in accordance with this section not earlier than 6 months before it allots the Shares; and
2. (b) a copy of the valuation report has been given to the proposed allottee; and
3. (c) copies of the valuation report and the relevant resolutions of the board of Directors have been given to the Registrar along with the notice of the Allotment

(2) A Public Company must not accept, in part or full payment for its Shares or any premium on them, an undertaking given by a Person that the Person or another Person is to undertake work or provide services for the Company or any other Person, unless the work is to be undertaken or the services provided within 5 years after the date of Allotment of the Shares.

(3) Subsections (1) and (2) do not apply to:

1. (a) the Allotment of Shares in a Company in connection with a Share exchange; or
2. (b) the Allotment of Shares in a Company in connection with a proposed merger with another Body Corporate; or
3. (c) the Allotment of Shares in a Company on the conversion of any convertible Securities; or
4. (d) the exercise of an option to acquire Shares in a Company; or
5. (e) the Allotment of Shares that are fully Paid-up from the reserves of a Company to all Shareholders in proportion to the number of Shares held by each Shareholder; or
6. (f) the consolidation and division, or subdivision, of Shares, or any class of Shares, in a Company in proportion to the Shares or the Shares in that class.

(4) A valuation report required under subsection (1) must be made by a Person registered as an auditor under these Regulations who is not:

1. (a) an Employee of the Company; or
2. (b) a partner, officer or employee of an Employee of the Company or of a partnership in which an Employee of the Company is a partner; or
3. (c) an officer or employee of an associated undertaking of the Company; or
4. (d) a partner, officer or employee of an associated undertaking of the Company or of a partnership in which an associated undertaking of the Company is a partner; or
5. (e) connected with the Company in a way prescribed under the Rules.

(5) The Person conducting the valuation (the valuer) may request an Employee of the Company to provide the information and explanation that the valuer considers necessary for the valuation. The Employee must comply with the request or take reasonable steps to ensure that the request is complied with.

(6) A Person must not:

1. (a) make a statement, or give information, to the valuer (whether orally, in a Document or in any other way) that is false or misleading in a material particular; or
2. (b) give a Document to the valuer that is false or misleading in a material particular; or
3. (c) conceal information if the concealment is likely to mislead or deceive the valuer.

(7) Contravention of subsection (5) or (6) is punishable by a fine.

(8) For this section:

1. (a) an Allotment is in connection with a Share exchange if the consideration for the Allotment is the transfer of Shares in another Body Corporate or the cancellation of Shares in another Body Corporate, and the Allotment is open to all holders (or all of a particular class of holders) of Shares in the other Body Corporate; and
2. (b) an Allotment is in connection with a proposed merger of a Company with another Body Corporate, if the Company proposes to acquire all the assets and Liabilities of the other Body Corporate in exchange for the issue of its Shares or other Securities to the shareholders or members of the other Body Corporate.

47. Bearer Shares

It is unlawful for a Company to issue bearer Shares. Any Shares issued by a Company that purport to be bearer Shares are void.

48. Shareholders’ pre-emption rights

(1) Subject to section 49 (Exceptions of pre-emption right), a Company must not allot Equity Securities to a Person on any terms unless:

1. (a) it has made an offer to each Person who holds Equity Securities to allot to the Person, on the same or more favourable terms, a proportion of the Equity Securities that is as nearly as practicable equal to the proportion of the Equity Securities held by the Person in the Company’s share capital; and
2. (b) the period during which any offer may be accepted has expired or the Company has received notice of the acceptance or refusal of every offer made.

(2) For purposes of subsection (1), the Company allots Equity Securities if it:

1. (a) grants a right to subscribe for, or to convert Securities into, Ordinary Shares; and
2. (b) sells Equity Securities in the Company that were held by the Company immediately before the sale as treasury Shares.

(3) Shares held by the Company as treasury Shares are disregarded for this section, so that the Company is not treated as a Person who holds Equity Securities and treasury Shares are not treated as forming part of the Company’s share capital.

(4) A Company’s Articles of Association may prohibit the Company from allotting Shares of a particular class in respect of an offer referred to in subsection (1)(a), unless the Company has complied with the equivalent pre-emption rights included in its Articles of Association. Subsection (1) does not apply in such circumstances and the Company may allot the Shares in accordance with those equivalent pre-emption rights, if an offer is made in accordance with subsection (5).

(5) An offer made under subsection (1)(a) or (4):

1. (a) may be made in hard copy or electronic form; and
2. (b) may, if a holder of Equity Securities has not given an address to the Company, be made by arranging for the offer, or a notice specifying where a copy of it can be obtained or inspected, to be published in the Appointed Publications; and
3. (c) must be open for acceptance for a period of not less than 14 days after the date:
4. (i) the offer is taken to have been received in accordance with the Articles of Association (or, if the Articles of Association do not contain such a provision, when the offer is reasonably expected to have been received by the offeree); or

(ii) the offer is published in the Appointed Publications.

(6) A Company does not contravene this section if:

1. (a) an offer has been made to holders of Equity Securities in accordance with this section; and
2. (b) the Company allots Equity Securities to:
3. (i) an existing holder of Equity Securities; or

(ii) a Person in whose favour an existing holder of Equity Securities has renounced right to the allotment.

(7) Contravention of this section is punishable by a fine.

49. Exceptions to pre-emption right

Section 48 (Shareholders’ pre-emption rights) does not apply in respect of an allotment of Equity Securities:

• (a) that are bonus Shares; or
• (b) that would be held under, or allotted or transferred under, an Employee Share Scheme; or
• (c) that are wholly or partly Paid-up otherwise than in cash in accordance with section 45 (Non-cash consideration for Shares in Private Company) or 46 (Non-cash consideration for Shares in Public Company); or
• (d) in a Private Company, to the extent that the Pre-emption right has been excluded or varied by its Articles of Association; or
• (e) by any Company, to the extent that the restrictions prescribed by section 48 (Shareholders’ pre-emption rights) have been excluded or varied by Special Resolution (unless a higher threshold is required by the Articles of Association), if the Special Resolution has been recommended by the Directors of the Company in a Written statement circulated to all Shareholders that sets out:

(i) the Directors’ reasons for making the recommendation; and

(ii) the amount to be paid to the Company in respect of allotment; and

(iii) the Directors’ justification of that amount.

50. Prohibition of public offers by Private Companies

(1) A Private Company must not:

• (a) make an offer of its Securities to the public; or
• (b) allot or agree to allot its Securities to any Person with a view to the Securities being offered to the public.

(2) Unless the contrary is proved, an allotment or agreement to allot Securities is presumed to be made with a view to such Securities being offered to the public if an offer of the Securities (or any of them) is made to the public:

• (a) within 6 months after the allotment or agreement to allot; or
• (b) before the receipt by the Company of the whole of the consideration to be received by the Company in respect of the Securities.

(3) A Private Company does not Contravene subsection (1) if it:

• (a) acts in good faith under arrangements under which it is to re-register as a Public Company before the Securities are allotted;
• (b) undertakes, as part of the terms of the offer, to re-register as a Public Company within 6 months after the day the offer is first made, and the undertaking is complied with; or
• (c) offers Securities by way of placement as provided in the Rules made by the AFSA; or
• (d) offers, allots, or allots by agreement Debt Securities, subject to Registrar’s approval.

(4) For this section:

• (a) an offer to the public includes an offer to any section of the public, however selected; and
• (b) an offer is not regarded as an offer to the public if:

(i) it can be properly regarded, in all the circumstances, as not being calculated to result, directly or indirectly, in the Securities becoming available to Persons other than those receiving the offer; or

(ii) it can be properly regarded, in all the circumstances, as being made to an existing Shareholder or Employee of the Company (or a member of the Person’s immediate family), an existing holder of a Debt Security of the Company, or a trustee for any of them, and, if it is made on terms renounceable, it can only be renounced in favour of another Person who is entitled to receive that offer; or

(iii) it can be properly regarded, in all the circumstances, as being an offer for Securities to be held under an Employee Share Scheme and, if it is made on terms renounceable, it can only be renounced in favour of another Person who is entitled to receive that offer.

(5) Contravention of subsection (1) is punishable by a fine.

51. Enforcement of section 50(1) prohibition

(1) This section applies if:

• (a) an application is made to the Court by a Shareholder or Creditor of a Company for an order under this section; or
• (b) an application is made to the Court by a Shareholder of a Company for an order under section 175 (Orders for unfair prejudice to Shareholders); or
• (c) an application is made to the Court by the Registrar for an order under this section in relation to a Company.

(2) If it appears to the Court that the Company is Contravening or is proposing to Contravene section 50(1) (Prohibition of public offers by Private Companies), the Court may order restraining the Company from Contravening or continuing to Contravene the subsection.

(3) If it appears to the Court that the Company has Contravened section 50(1), the Court may make 1 or more order sunder subsection (4).

(4) If subsection (3) applies, the Court may:

• (a) order the Company to re-register as a Public Company; or
• (b) if it appears to the Court that the Company does not meet the requirements for re-registration as a Public Company or it is impractical or undesirable to require the Company to re-register as a Public Company, make any of the following orders against either the Company or any Person Knowingly Concerned in the Contravention (whether or not the Person is an Officer of the Company):

(i) a remedial order to put an affected party back in the position that the party would have been in apart from the Contravention;

(ii) without limiting subparagraph (i), an order that any Person Knowingly Concerned in the Contravention must offer to purchase Securities at the price and on the other terms the Court considers appropriate;

(iii) if a remedial order is made against the Company—an order that the Company’s share capital be reduced accordingly;

(iv) an order that the Company be subject to a compulsory winding up;

(v) any other order the Court considers appropriate.

(5) In this section: affected party means a Shareholder or Creditor of the Company.

52. Register of Shareholders

(1) A Company must establish and maintain a Register of Shareholders. An election may be made in relation to a Private Company for the information, which otherwise would require to be kept in the Register of Shareholders, to be kept by the Registrar.

(2) The Company must promptly enter the following in the Register of Shareholders:

• (a) the names and addresses of its Shareholders, together with a statement of the Shares held by each Shareholder, distinguishing each Share by its number (if the Share has a number) and, if the Company has 2 or more classes of issued Shares, by its class;
• (b) the date each Shareholder was registered as a Shareholder;
• (c) the date any Person ceased to be a Shareholder;
• (d) the date the number of Shares held by any Shareholder increased or decreased;
• (e) for Shares that are not fully paid—the amount remaining unpaid on each Share;
• (f) for joint holders of Shares in a Company—unless otherwise provided in its Articles of Association, the following:

(i) the names of each joint holder;

(ii) the nominee Shareholder for the purposes of voting;

(iii) a nominated single address to which all communications required to be sent to a Shareholder can be sent.

(3) Contravention of subsections (1) and (2) is punishable by a fine.

(4) A Private Company may make an election to keep information in the Register kept by the Registrar.

(5) An election may be made under this section by:

• (a) the applicant wishing to incorporate a Private Company under these Regulations; or
• (b) the Private Company itself once it is incorporated.

(6) In paragraph (b) of subsection (5), the election is of no effect, without prior agreement of all the Shareholders of the Private Company at the particular time to the making of the election.

(7) An election under this section is made by giving notice of election to the Registrar.

(8) If the notice is given by Person(s) wishing to incorporate a Private Company:

• (a) it must be given together with the application for the incorporation under section 13; and
• (b) it must be accompanied by a statement containing all the information under subsection (2).

(9) If the notice is given by the Private Company, it must be accompanied by:

• (a) a statement by the Private Company that all the Shareholders of the Private Company have assented to the making of the election; and
• (b) a statement containing all the information that is required under subsection (2) to be contained in the Private Company's Register of Shareholders as at the date of the notice in respect of matters that are current as at that date.

(10) An election made under subsection (4) takes effect when the notice of election is registered by the Registrar.

(11) The election remains in force until either:

• (a) the Private Company ceases to be a Private Company; or
• (b) a notice of withdrawal sent by the Private Company under subsection (15) is registered by the Registrar, whichever occurs first.

(12) While an election under subsection (4) is in force, a Private Company must continue to keep a Register of Shareholders in accordance with subsection (2) containing all the information that was required to be stated in that Register as at the time immediately before the election took effect, but the Private Company does not have to update that Register to reflect any changes that occur after that time.

(13) The date to be recorded in the Register kept by the Registrar is to be the date on which the document containing that information is registered by the Registrar.

(14) During the period when an election under subsection (4) is in force, a Private Company must deliver to the Registrar any information under subsection (2) which the Private Company would, in the absence of any such election, have been obliged under these Regulations to enter in its Register of Shareholders and it must do so as soon as reasonably practicable after any relevant change but in any event within a period of 14 days.

(15) A Private Company may by giving notice of withdrawal to the Registrar withdraw an election made by or in respect of it under subsection (4), where:

• (a) the withdrawal takes effect when the notice is registered by the Registrar;
• (b) the effect of withdrawal is that the Private Company's obligation under subsection (1) to maintain a Register of Shareholders applies from then on with respect to the period going forward;
• (c) the Private Company must place a note in its Register of Shareholders—

(i) stating that the election under subsection (4) has been withdrawn;

(ii) recording when that withdrawal took effect; and

(iii) indicating that information about its Shareholders relating to the period when the election was in force that is no longer current, is available for public inspection in the Register kept by the Registrar.

(16) All notices and information to be delivered to the Registrar under this section must be made in Writing.

(17) Contravention of subsections (4) to (16) is punishable by a fine.

53. Register of Debt Security Holders

(1) If a Company has issued Debt Securities, it must establish and maintain a Register of Debt Security Holders.

(2) The Company must promptly enter in the Register of Debt Security Holders the name and address of, and the amount of the Debt Securities held by, each Debt Security holder.

(3) Contravention subsection (2) in relation to a Debt Security does not affect the validity of the Debt Security.

(4) Contravention of this section is punishable by a fine.

54. Transfer and registration of Shares and Debt Securities

(1) Despite anything in the Articles of Association of a Company, the Company must not register a transfer of a Share in, or Debt Security of, the Company unless it has been given a written instrument of transfer by the transferee or the transfer is in accordance with a provision of the Rules that enables title to Securities to be evidenced and transferred without a written instrument of transfer.

(2) Subject to subsection (6), the Company must promptly register a transfer of a Share in, or Debt Security of, the Company if it is permitted to register the transfer under subsection (1).

(3) Subsection (1) does not affect any power of the Company to register as a Shareholder or Debt Security holder any Person to whom the right to any Share in, or Debt Security of, the Company has been transmitted by operation of these Regulations, including under any order made by a court of competent jurisdiction.

(4) An application for the transfer of a Share or Debt Security made by the Personal Representative of a deceased Shareholder or Debt Security holder is as effective as it would been if it had been made personally by the deceased Shareholder of Debt Security holder.

(5) On the application of the transferor of a Share in or Debt Security of a Company, the Company must promptly enter in its Register of Shareholders or Register of Debt Security Holders (as the case may be) the name of the transferee in the same way and subject to the same conditions as if the application for the entry had been made by the transferee.

(6) If a Company has reasonable grounds to refuse to register a transfer of Shares in, or Debt Securities of, the Company, the Company must, as soon as reasonably practicable but within 14 days after the day the transfer was lodged with it, give the transferor and transferee Written notice of its reasons for the refusal.

(7) Contravention of this section is punishable by a fine.

55. Place where registers must be kept

(1) A Company’s Register of Shareholders and, if it has issued Debt Securities, its Register of Debt Security Holders, must be kept at its registered office.

(2) However, a register may be maintained by an agent of the Company at the premises of the agent and kept at that office, if the Company has immediate access to the register. If the register is maintained by an agent of the Company at the premises of the agent and not in the AIFC, the Company may keep a copy of the register at its registered office and, if it does so, the Company must update the copy of the register to reflect any changes to the information contained in the register within 10 days after the day the register is changed by the agent.

(3) Contravention of this section is punishable by a fine.

56. Inspection of registers

(1) A Company must ensure that its Register of Shareholders and its Register of Debt Security Holders (if any) are open for inspection by, respectively, any Shareholder or Debt Security holder of the Company during business hours without charge, and, if the Company is a Public Company, by any other Person on application under subsection (3) and on payment of the reasonable amount (if any) required by the Company, at the registered office of the Company or, if the register is maintained at the office of an agent and the office is in the AIFC, at the office of the agent.

(2) However, if a register mentioned in subsection (1) is maintained at an office of an agent of the Company and the office is outside the AIFC, the Company must keep a copy of the register at its registered office and that subsection applies to the Company as if a reference to the register were a reference to the copy kept at its registered office.

(3) An application by a Person under this subsection must be made in Writing to the Company and must include the following information:

• (a) if the applicant is an individual—the applicant’s name and address;
• (b) if the applicant is an organisation—the name and address of an individual responsible for making the application on behalf of the organisation;
• (c) the purpose for which the information obtained is to be used;
• (d) whether the information will be disclosed to any other Person and, if so:

(i) if the other Person is an individual—the individual’s name and address; and

(ii) if the other Person is an organisation—the name and address of an individual responsible for receiving the information on its behalf; and

(iii) the purpose for which the information is to be used by the other Person.

(4) If a Company refuses to allow a Person to inspect a register under subsection (1), the Registrar may, on the Person’s application, direct the Company to immediately allow the Person to inspect the register. An application made under this subsection by a Person other than a Shareholder or Debt Security holder must include the information set out in subsection (3).

(5) A Company must comply with a direction given to it under subsection (4).

(6) Contravention of subsection (1) or (5) is punishable by a fine.

57. Rectification of registers

(1) If:

• (a) without reasonable excuse, the name of a Person, or the number of Shares held or the class of Shares held by a Person, is not entered correctly in, or is omitted from, a Company’s Register of Shareholders; or
• (b) there is a Failure or unnecessary delay in entering in the Register of Shareholders of a Company the fact that a Person has ceased to be a Shareholder; the Person (an aggrieved Person), or any Shareholder of the Company, may apply to the Registrar for rectification of the register.

(2) If:

• (a) without sufficient reason, the name of a Person, or the number of Debt Securities held or the type of Debt Securities held by a Person, is, not entered correctly in, or is omitted from, a Company’s Register of Debt Security Holders; or
• (b) there is a Failure or unnecessary delay in entering in the Register of Debt Security Holders of a Company the fact that a Person has ceased to be a Debt Security holder; the Person (an aggrieved Person), or any Debt Security holder of the Company, may apply to the Registrar for rectification of the Register of Debt Security Holders.

(3) If the Registrar receives an application under subsection (1) or (2) in relation to a register of a Company, the Registrar may:

• (a) order the Company to rectify the register; or
• (b) refuse, for reasonable cause (including, for example, the existence of a dispute relating to the application or the relevant holding), to order the Company to rectify the register.

(4) A Company must not Contravene an order of the Registrar made under subsection (3)(a).

(5) Without limiting the Registrar’s powers under subsection (3), the Court may make 1 or more of the following orders:

• (a) on the application of the Registrar, an order enforcing an order made by the Registrar under subsection (3)(a);
• (b) on the application of an aggrieved Person in relation to a Company, or any Shareholder or Debt Security holder of a Company, an order directing the Company to rectify, or not to rectify, the Company’s Register of Shareholders or Register of Debt Security Holders or to do, or not do, anything else;
• (c) on the application of an aggrieved Person in relation to a Company, an order requiring the Company to pay damages.

(6) Contravention of subsection (4) is punishable by a fine.

58. Share certificates

(1) If a Company allots any of its Shares or receives a properly completed transfer for any of its Shares, the Company must, within 14 days after the day it allots the Shares or receives the transfer, complete and have ready for delivery a certificate for all the Shares alloted or transferred, unless title to the Shares is evidenced without a written instrument in accordance the Rules.

(2) If title to the Shares or the transfer of the Shares is evidenced without a written instrument, the Company must complete the registration of the Allotment or transfer of the Shares within 14 days after the day the Company allots the Shares or receives a properly completed transfer for the Shares.

(3) Subsections (1) and (2) does not apply to a transfer of Shares if the Company is, for any reason, entitled to refuse to register the transfer and does not register the transfer.

(4) Contravention of this section is punishable by a fine.

59. Right of Public Company to request information about interests in its Shares

(1) A Public Company may give a Written notice to any Person whom it knows or has reasonable grounds to believe:

• (a) is interested in the Company’s Shares; or
• (b) has been interested in the Company’s Shares at any time within 3 years before the date of the notice.

(2) The notice may require the Person to confirm any interest that Person has, or has had, in the Shares and to provide the details relating to the interest that are specified in the notice.

(3) For this section, a Person has an interest in Shares of a Company if the Person:

• (a) has entered into a contract to acquire the Shares; or
• (b) is not the registered holder of the Shares, but is entitled to:

(i) exercise any right given by holding the Shares; or

(ii) control the exercise of any such right.

(4) If a Person Fails to comply with a notice given to the Person by a Company under subsection (1), the Company may apply to the Court for an order directing that the Shares in which the Person has an interest be subject to any 1 or more of the following restrictions:

• (a) that any transfer of, or agreement to transfer, the Shares is void;
• (b) that voting rights are not exercisable in respect of the Shares;
• (c) that no further Shares be issued instead of the Shares or under an offer made to their holder;
• (d) that, except in a liquidation, no payment be made of amounts owed by the Company on the Shares, whether in respect of capital or otherwise.

(5) On the application, the Court may make the order that the Court considers appropriate, having regard, in particular, to the rights of third parties in respect of the Shares in relation to which the application is made.

(6) Any Person whose rights are, or are likely to be, unfairly affected by an order of the Court made under subsection (5) may apply to the Court on that ground. If the Court is satisfied that the order unfairly affects the rights of the applicant or any other third party, the Court may, for the purpose of protecting the rights of the applicant or any third party, and subject to the terms that it considers appropriate, order that, to the extent stated in the order:

• (a) restrictions imposed by the order under subsection (5) do not apply in relation a stated Person or Persons (or a stated category of Persons); or
• (b) relevant Shares are to cease to be subject to restrictions imposed by the order under subsection (5).

(7) If there is a restriction applying in relation to Shares under an order under subsection (5) (as affected by any order made under subsection (6)), each the following are void to the extent that they Contravene the restriction:

• (a) any transfer of, or agreement to transfer, the Shares;
• (b) any vote cast, or any other action taken relying on a vote cast, in respect of the Shares;
• (c) any issue of Shares instead of the Shares or under an offer made to their holder;

except in a liquidation, any payment made of amount owed by the Company on the Shares, whether in respect of capital or otherwise.

(8) An application may be made to the Court, by the Company concerned or any Person aggrieved, for an order directing that Shares subject to restrictions under an order under subsection (5) are to cease to be subject to the restrictions. The Court may not make the order unless:

• (a) it is satisfied that the relevant facts about the Shares have been disclosed to the Company and no Person has received an unfair advantage because of the earlier Failure to make the disclosure; or
• (b) the Shares are to be transferred for valuable consideration and the Court approves the transfer.

60. Power to issue redeemable Shares

(1) Subject to section 61 (Power of Company to purchase its own Shares), a Company may, if authorised to do so by its Articles of Association, issue and allot, or convert existing non-redeemable shares (whether allotted or not) into, Shares that are to be redeemed, or are liable to be redeemed, either in accordance with their terms or at the option of the Company or the Shareholder.

(2) However, the Company must not convert existing non-redeemable Shares into redeemable Shares if, as a result, there are no issued Shares that are not redeemable.

(3) A Company may redeem Shares in the Company only if they are fully paid and from the following sources:

1. (a) for the nominal value of the Shares—from the Paid-up share capital, share premium and other reserves of the Company; and
2. (b) for any premium—from realised or unrealised profits, share premium or other reserves of the Company.

(4) A Company must not redeem any of its Shares unless all of the Directors sign a certificate stating that they have formed the opinion:

1. (a) that, immediately following the day payment for the redemption is proposed to be made, the Company will be able to discharge its Liabilities as they fall due; and
2. (b) that, having regard to:
3. (i) the prospects of the Company and to the intentions of the Directors with regard to the management of the Company’s business; and

(ii) the amount and character of the financial resources that will be available to the Company; the Company will be able to continue to conduct its business, and discharge its Liabilities of they fall due, for 12 months immediately after the day payment for the redemption is proposed to be made.

(5) A Director must not sign a certificate under subsection (4) unless the Director has reasonable grounds for the matters stated in the certificate.

(6) Contravention of subsection (5) is punishable by a fine.

(7) If Shares are redeemed under this section, the Shares must be treated as cancelled and the amount of the Company’s share capital must be reduced by the nominal value of the Shares redeemed, unless they are held by the Company as treasury Shares.

(8) If a Company is about to redeem Shares under this section, it may issue Shares up to the value of the Shares to be redeemed, as if those Shares had never been issued.

(9) A Company must not redeem its Shares under this section if because of the redemption:

1. (a) there would no longer be a Shareholder of the Company holding Shares other than redeemable Shares; or
2. (b) the Company would cease to have the share capital required by section 43 (Minimum share capital) or any other applicable AIFC Regulations and AIFC Rules.

(10) If a Company redeems any of its Shares, the Company must, within 14 days after the day the redemption is completed, notify the Registrar of the redemption and tell the Registrar what the Company’s share capital is after completion of the redemption.

61. Power of Company to purchase its own Shares

(1) Subject to any restrictions in its Articles of Association, a Company may purchase its own Shares to the extent permitted by this section.

(2) A Company must not purchase its own shares unless the purchase is approved by:

• (a) a Special Resolution, if it is an off-market purchase and the Company is not a Wholly-Owned Subsidiary; or
• (b) an Ordinary Resolution, if it is a market purchase or the Company is a Wholly-Owned Subsidiary.

(3) The holders of the Shares to be purchased do not have a right to vote on the Resolution required under subsection (2). The Company must ensure that the holders of those Shares do not vote on the Resolution.

(4) A Company must not purchase its Shares under this section if:

• (a) because of the purchase, there would no longer be a Shareholder of the Company holding Shares other than redeemable Shares or Shares held as treasury Shares; or
• (b) the Shares are not fully paid; or
• (c) the Company would cease to have the share capital required by section 43 (Minimum share capital).

(5) The provisions of section 60(4) to (5) (Power to issue redeemable Shares) apply, with any necessary changes, to the purchase by a Company under this section of its own Shares as they apply to the redemption by the Company of its redeemable Shares.

(6) If a Company purchases its own Shares, the Company must ensure that the Shares are paid for:

• (a) if it is an off-market purchase—on purchase; or
• (b) if it is a market purchase—in accordance with the rules of the relevant Regulated Market.

(7) If a Company proposes to purchase its own Shares, the Company must:

• (a) send a copy of the contract setting out the terms for the purchase of the Shares to each Shareholder at or before the proposed Resolution approving the purchase is sent to the Shareholder; and
• (b) ensure that a copy of the contract is available for inspection by Shareholders at the Company’s registered office for at least 15 days before the day of the meeting to consider the Resolution and at the meeting itself.

(8) If a Public Company purchases its own Shares, the Company must ensure that a copy of the contract setting out the terms of the purchase is kept available for inspection, at the request of any Shareholder, at the Company’s registered office for 10 years after the day the Shares are purchased.

(9) For this section:

• (a) a purchase of Shares is a market purchase if it is made by a Public Company on a Regulated Market; and
• (b) a purchase of Share is an off-market purchase if it is not made by a Public Company on a Regulated Market.

(10) If a Company purchases its own Shares under this section, the Company must, within 14 days after the day the purchase is completed, notify the Registrar of the purchase and tell the Registrar what the Company’s share capital is after completion of the purchase.

(11) Contravention of this section is punishable by a fine.

(12) Contravention of section 60(5) as applied by subsection (5) is punishable by a fine.

62. Treasury Shares

(1) A Company may hold any Shares that have been purchased by it under section 61 (Power of Company to purchase its own Shares) as treasury Shares if:

1. (a) there is no restriction in its Articles of Association that prohibits it from holding the Shares as treasury Shares; and
2. (b) it is approved by an Ordinary Resolution; and
3. (c) it complies with the other requirements of this section.

(2) A Company that holds Shares as treasury Shares may:

1. (a) cancel the Shares; or
2. (b) sell the Shares; or
3. (c) transfer the Shares for the purposes of, or under, an Employee Share Scheme; or
4. (d) transfer the Shares to existing Shareholders as fully paid bonus Shares; or
5. (e) continue to hold the Shares.

(3) If a Company cancels Shares held as treasury Shares, the amount of the Company’s share capital must be reduced by the nominal value of the cancelled Shares.

(4) While Shares are held by a Company as treasury Shares:

1. (a) the Company must not, for sections 95 (Meeting requests) and 98 (General provisions about meeting and votes), be treated as being a Shareholder or as holding Shares in the Company; and
2. (b) no voting rights (direct or through proxy) attach to the Shares held as treasury Shares; and
3. (c) if, for a Resolution to be passed or any act or decision to be taken (or not taken) by any Person, a provision of these Regulations and the Rules requires:
4. (i) a proportion of votes attaching to Shares held in the Company to be obtained; or

(ii) a proportion of the holders of Shares of the Company (which may include Persons representing by proxy other holders of Shares of the Company) to consent or not to consent; the Shares held as treasury Shares must not, for that provision, be taken into account in working out the total number of Shares held by the Company or whether the required proportion has been attained; and

1. (d) the Company must not make or receive any dividend, or any other Distribution (whether in cash or otherwise) of the Company’s assets (including any Distribution of assets to Shareholders on a winding up), in respect of the Shares held as treasury Shares; and
2. (e) the rights in respect of the treasury Shares must not be exercised by or against the Company; and
3. (f) the obligations in respect of the treasury Shares must not be enforceable by or against the Company; and
4. (g) any purported exercise or enforcement of a right, obligation, requirement or anything else mentioned in paragraphs (b) to (f) is void.

(5) However, subsection (4) does not prevent:

1. (a) an Allotment of Shares as fully paid bonus Shares in respect of treasury Shares; or
2. (b) the payment of any amount payable on the redemption of redeemable Shares that are held as treasury Shares.

(6) If a Company is about to cancel Shares under subsection (2)(a), it may issue Shares up to the Paid-up amount of the Shares to be cancelled as if those Shares had never been issued.

(7) Any Shares allotted by a Company as fully paid bonus Shares in respect of Shares held as treasury Shares must be treated as if they were purchased by the Company at the time they were allotted.

(8) If Shares are held by a Company as treasury Shares:

1. (a) the Register of Shareholders must include an entry relating to the number of Shares held as treasury Shares; and
2. (b) the Register must, to the extent it contains details of the Shareholders of the Company, include an entry relating to the number of Shares held as treasury Shares; and
3. (c) the annual return filed under section 26 (Annual return) must include an entry relating to the number of Shares held as treasury Shares on 1 January in the year of the return.

63. Prohibition on financial assistance to acquire Shares

(1) A Company must not:

• (a) if it is a Public Company—provide financial assistance for a Person to acquire Shares, or any units of Shares, in itself or its Holding Company; and
• (b) if it is a Private Company—provide financial assistance for a Person to acquire Shares, or units of Shares, in a Holding Company that is a Public Company, unless the provision of the financial assistance is authorised under any 1 or more of subsections (2) to (6).

(2) The provision of the financial assistance is authorised if the provision of the financial assistance:

• (a) does not materially prejudice the interests of the Company or its Shareholders or the Company’s ability to discharge its Liabilities as they fall due; and
• (b) is approved by a Resolution of Shareholders holding not less than 90% in nominal value of the Shares giving a right to attend and vote at any Shareholders’ meeting.

(3) The provision of the financial assistance is authorised if the Company’s ordinary business includes providing finance and the financial assistance is provided in the ordinary course of that business and on ordinary commercial terms.

(4) The provision of the financial assistance is authorised the financial assistance is provided in connection with, or for the purposes of, an Employee Share Scheme of the Company.

(5) The provision of the financial assistance is authorised if the provision of the financial assistance is only an incidental part of some larger purpose of the Company and the financial assistance is given in good faith in the interests of the Company.

(6) The provision of the financial assistance is authorised if the financial assistance is of a kind prescribed by the Rules for this subsection.

(7) Each Officer of a Company must ensure that the Company does not Contravene this section.

(8) Contravention of this section is punishable by a fine.

(9) In this section: financial assistance means financial assistance of any kind, and includes any of the following:

• (a) making a loan;
• (b) making a gift;
• (c) issuing a Debt Security;
• (d) giving security over the Company’s assets;
• (e) giving a guarantee or an indemnity in respect of another Person’s Liability; but does not include any of the following:
• (f) a Distribution of the Company’s assets by way of dividend lawfully made or in the course of the Company’s winding up;
• (g) an Allotment of fully paid bonus Shares;
• (h) a redemption or purchase by a Company of its own Shares under this Chapter;

(i) a reduction of share capital under Chapter 7.

64. Reduction of Share Capital

(1) A Private Company may reduce its Share Capital by a Special Resolution supported by a solvency statement under section 65 (Reduction of Share Capital by Private Company supported by solvency statement).

(2) A Public Company or Private Company may reduce its Share Capital by a Special Resolution confirmed by the Court, following the procedures in sections 66 (Reduction of Share Capital by Special Resolution confirmed by Court order) and 67 (Court order confirming reduction of Share Capital).

(3) A Company must not reduce its Share Capital under subsection (1) or (2) if:

• (a) its Articles of Association contain any prohibition or restriction relating to capital reduction; or
• (b) because of the reduction, there would no longer be any Shareholder of the Company other than holders of redeemable Shares; or
• (c) if the Company is a Public Company—the reduction in the Share Capital would result in the Company not having the share capital required by section 43 (Minimum share capital)or any other applicable AIFC Regulations and AIFC Rules, except in the circumstances to which section 69 (Public Company reducing its Share Capital below its authorised minimum) applies.

(4) Subject to subsection (3), a Company may reduce its Share Capital in any way, and on the terms, decided by it, including, for example:

• (a) by extinguishing or reducing the Liability on any of its Shares in respect of Share Capital not Paid-up, or
• (b) either with or without extinguishing or reducing Liability on any of its Shares, by

(i) cancelling any Paid-up Share Capital that is lost or unrepresented by available assets, or

(ii) by repaying any Paid-up Share Capital in excess of the Company’s requirements; or

• (c) by causing any of its Shares that have been issued otherwise than as fully Paid-up to be forfeited for Failure to pay any amount payable on them or by accepting their surrender instead of causing them to be forfeited.

(5) For this Chapter, a redemption or purchase by a Company of its Shares in accordance with Chapter 6 is not a reduction of the Share Capital of the Company.

(6) A Company must not reduce its Share Capital otherwise than in accordance with this Chapter. Contravention of this subsection is punishable by a fine.

65. Reduction of Share Capital by Private Company supported by solvency statement

(1) A Resolution for reducing Share Capital of a Private Company is supported by a solvency statement for section 64(1) (Reduction of share capital) if:

• (a) on a day not more than 30 days and not less than 15 days before the date the reduction of the Share Capital is to have effect, the Company has published a notice in the Appointed Publications stating the following:

(i) the amount of the Share Capital as most recently determined by the Company;

(ii) the nominal value of each Share;

(iii) the amount by which the Share Capital is to be reduced;

(iv) the date the reduction is to have effect; and

• (b) the notice contains a solvency statement that complies with subsection (2).

(2) A solvency statement is a statement by each Director of the Company that the Director:

• (a) has formed the opinion, as regards the Company’s situation at the date of the statement, that there is no ground on which the Company could be found to be unable to discharge its debts as they fall due; and
• (b) has also formed the opinion that:

(i) if the Company intended to commence its winding up within 12 months after the date of the statement, the Company would be able discharge its debts in full within 12 months of the commencement of the winding up; or

(ii) in any other case, the Company would be able to discharge its debts as they fall due during the year immediately after the date of the statement.

(3) A Director of the Company must not make a solvency statement mentioned in subsection (1)(b) unless the Director has reasonable grounds for the opinion expressed in the statement. In forming the opinion, the Director must take into account all of the Company’s Liabilities (including any contingent or prospective Liabilities).

(4) Contravention of subsection (3) is punishable by a fine.

(5) If a Company reduces the amount of its Share Capital, the Company must, within 14 days after the day the reduction takes effect, file with the Registrar a copy of the notice under subsection (1).

66. Reduction of Share Capital by Special Resolution confirmed by Court order

(1) If a Company is permitted to do so under its Articles of Association and has passed a Special Resolution for reducing its Share Capital, it may apply to the Court for an order confirming the reduction.

(2) If the proposed reduction of Share Capital involves the payment to a Shareholder of any Paid-up Share Capital or a diminution of Liability in respect of any unpaid Share Capital, the subsections (3), (4) and (5) apply, except so far as the Court directs otherwise under subsection (6).

(3) Any Creditor of the Company is entitled to object to the reduction of capital if the Creditor, at the date fixed by the Court, is entitled to a debt or claim that would be admissible in proof against the Company, if that date were the commencement of the winding up of the Company.

(4) The Court must settle a list of Creditors entitled to object under subsection (3). For that purpose, the Court:

• (a) must ascertain, as far as possible, without requiring an application from any Creditor, the names of the Creditors and the nature and amount of their debts or claims; and
• (b) may publish notices fixing a day or days by which Creditors not entered on the list are to claim to be entered in the list or are to be excluded from the right of objecting to the reduction of capital.

(5) If, for a Creditor entered on the list, the Creditor’s debt or claim is not discharged or has not determined and the Creditor has not consented to the reduction, the Court may dispense with the consent of that Creditor, on the Company securing payment of the Creditor’s debt or claim by appropriating, as the Court may direct, the following amount:

• (a) if the Company admits the full amount of the debt or claim or, though not admitting it, is willing to provide for it—the full amount of the debt or claim;
• (b) if the Company does not admit, and is not willing to provide for, the full amount of the debt or claim or the amount is contingent or not ascertained—an amount fixed by the Court.

(6) The Court may, having regard to any special circumstances of the case, direct that subsections (3), (4) and (5) do not apply, or apply with stated modifications, in relation to any class or any classes of Creditors.

(7) An Officer of the Company must not:

• (a) intentionally or recklessly:

(i) conceal the name of a Creditor entitled to object to the reduction of Share Capital, or

(ii) misrepresents the nature or amount of the debt or claim of a Creditor, or

• (b) be Knowingly Concerned in any such concealment or misrepresentation.

(8) Contravention of subsection (7) is punishable by a fine.

67. Court order confirming reduction of Share Capital

(1) The Court may, on the terms it considers appropriate, make an order confirming the reduction of a Company’s Share Capital, if satisfied, in relation to every Creditor of the Company who under section 66(3) (Reduction of Share Capital by Special Resolution confirmed by Court order) is entitled to object to the reduction of the Share Capital, that either:

• (a) the Creditor has consented to the reduction; or
• (b) the Creditor’s debt or claim has been discharged or has determined or has been secured.

(2) If the Court makes an order under subsection (1), it may also make either or both of the following orders:

• (a) an order requiring the Company to publish the reasons for the reduction of Share Capital, or the other information about it that the Court considers appropriate, with a view to giving proper information to the public about the causes that led to the reduction;
• (b) if there is any reserve arising out of the reduction of Share Capital—an order directing whether or not it is distributable.

68. Registration of order and statement of capital

(1) If the Court confirms the reduction of a Company’s Share Capital, the Company must give the Registrar:

• (a) a copy of the order of the Court confirming the reduction; and
• (b) a statement of capital, approved by the Court, showing in respect of the Company’s Share Capital:

(i) the total number of issued Shares; and

(ii) the aggregate nominal value of those Shares; and

(iii) the amount Paid-up and unpaid (if any) on each Share (whether on account of the nominal value or by way of premium).

(2) The Registrar must register the order and statement of capital. On that registration the Special Resolution for reducing the Share Capital as confirmed by the order takes effect.

(3) The Registrar must certify the registration of the order and statement of capital. The certificate:

• (a) must be signed by the Registrar; and
• (b) is conclusive evidence that all the requirements of these Regulations and the Rules in relation to the reduction of Share Capital have been complied with and that the Company’s Share Capital is as stated in the statement of capital.

(4) On its registration, the statement of capital is taken to be substituted for the corresponding part of the Articles of Association.

69. Public Company reducing its Share Capital below its authorised minimum

(1) If registration of an order of the Court under section 67 (Court order confirming reduction of Share Capital) in relation to a Public Company would result in the Company not having the Share Capital required by section 43 (Minimum share capital), the Registrar must nor register the order unless the Company is first re-registered as a Private Company under section 39 (Re-registration of Public Company as Private Company) or the Court has made an order under subsection (2).

(2) The Court may, by order, authorise the Company to be re-registered as a Private Company without it having passed the Special Resolution required under section 39 (Re-registration of Public Company as Private Company). The order must specify the changes to the Articles of Association and name in connection with the re-registration.

(3) The Registrar must, on receipt of an order under subsection (2), issue a certificate of incorporation altered to meet the circumstances of the case. On the issue of the certificate, the Company becomes a Private Company and the changes to the Articles of Association and its name take effect.

70. Liability to Creditors in respect of reduction of Share Capital by Court order

(1) This section applies if:

• (a) a Creditor entitled to object to the reduction of the Share Capital of a Company is not entered on the list of Creditors under section 66 (Reduction of Share Capital by Special Resolution confirmed by Court order) because of the Creditor’s ignorance of the proceedings for the reduction or of the nature and effect of the proceedings on the Creditor’s claim; and
• (b) after the reduction of capital, the Company is unable to pay the amount of the Creditor’s debt or claim.

(2) Every Person who was a Shareholder of the Company on the day the Special Resolution for reducing the Share Capital took effect under section 68(2) (Registration of order and statement of capital) is liable to contribute, towards payment of the Creditor’s debt or claim, an amount not exceeding the amount that the Person would have been liable to contribute if the Company had commenced to be wound up on the previous day.

(3) If the Company is wound up under these Regulations, the Court, on the application of the Creditor and proof that the Creditor is a Creditor mentioned in subsection (1)(a), may settle a list of Persons liable to contribute under subsection (2), and may make and enforce calls and orders on the Persons included on the list as if they were ordinary contributories in a winding up.

(4) This section does not affect the rights of the listed Persons among themselves.

71. Treatment of reserves arising from reduction of capital

Any reserve arising from the reduction of a Company’s Share Capital is only distributable as provided in the Articles of Association or authorised by a Special Resolution, unless otherwise provided by an order of the Court under section 67(2)(b) (Court order confirming reduction of Share Capital).

72. Restrictions on Distributions

(1) A Company must not make a Distribution unless the Distribution is made out of profits available for Distribution. The profits available for Distribution are the Company’s accumulated, realised profits (so far as not previously utilised by Distribution or capitalisation) less its accumulated, realised losses (so far as not previously written off in a reduction or reorganisation of capital duly made).

(2) A Public Company must not make a Distribution:

• (a) unless the amount of its net assets is not less than the aggregate of its share capital and undistributable reserves; and
• (b) unless, and only to the extent that, the Distribution does not reduce the amount of those net assets to less than that aggregate.

(3) Whether a Distribution may be made by a Company without Contravening this section is determined by reference to the following items as stated in the relevant accounts:

• (a) profits, losses, assets and Liabilities;
• (b) provisions of any kind;
• (c) share capital and reserves (including undistributable reserves).

(4) The relevant accounts are the Company’s last annual accounts, except that:

• (a) if the Distribution would be found to Contravene this section by reference to the Company’s last annual accounts—it may be justified by reference to interim accounts; and
• (b) if the Distribution is proposed to be declared during the Company’s first accounting reference period or before any accounts have been prepared in respect of that period—may be justified by reference to initial accounts.

(5) If the relevant accounts are:

• (a) the Company’s last annual accounts—the accounts must be the accounts that were sent to Shareholders under section 131(4) (Accounts); and
• (b) interim accounts—the accounts must be properly prepared so as to enable a reasonable judgement to be made about the amounts of the items mentioned in subsection (3); and
• (c) initial accounts—the accounts must be properly prepared so as to enable a reasonable judgement to be made about the amounts of the items mentioned in subsection (3) and, if the Company is a Public Company, accompanied by a report from the Company’s auditor stating whether, in the auditor’s opinion, the accounts have been properly prepared.

(6) If any applicable requirement in subsection (5) is not complied with in relation to any accounts, the accounts may not be relied on for this section and the Distribution is accordingly treated as a Contravention of this section.

(7) In this section: auditor means a Person who is registered by the Registrar as an auditor under these Regulations.

Distribution, in relation to a Company, means every description of distribution of the Company’s assets to its Shareholders, whether in cash or otherwise, except a distribution by way of:

• (a) an issue of bonus Shares; or
• (b) the redemption or purchase of any of the Company’s own Shares out of share capital (including the proceeds of any fresh issue of Shares), or out of unrealised profits, in accordance with these Regulations and the Rules; or
• (c) the reduction of share capital either by:

(i) extinguishing or reducing the Liability of any of the Shareholders in respect of share capital not Paid-up or by repaying any Paid-up share capital; and

(ii) a distribution of assets to Shareholders on the winding up of the Company.

undistributable reserves, of a Company, means any of the following:

• (a) its share premium account;
• (b) any capital redemption reserve;
• (c) the amount by which its accumulated, unrealised profits (so far as not previously utilised by Distribution or capitalisation) exceeds its accumulated, unrealised losses (so far as not previously written off in a reduction or reorganisation of capital duly made);
• (d) any other reserve that the Company is prohibited from distributing by its Articles of Association or under any applicable AIFC Regulations or AIFC Rules.

(8) Contravention of this section is punishable by a fine.

73. Consequences of unlawful Distribution

If a Distribution, or part of a Distribution, made by a Company to any of its Shareholders is made in Contravention of section 72 (Restrictions on Distributions) and, at the time of the Distribution, the Shareholder knows or has reasonable grounds for believing that it is made in Contravention of that section, the Shareholder is liable to repay the Distribution, or that part of it, to the Company or, for a Distribution made otherwise than in cash, to pay to the Company an amount equal to the value of the Distribution, or that part, at that time.

74. Directors

(1) A Private Company must have at least 1 director and a Public Company must have at least 2 directors.

(2) A Person must not be a Director if the Person:

• (a) is not a natural person; or
• (b) is under 18 years old; or
• (c) is disqualified from being a Director because of:

(i) having been convicted of a criminal offence, involving dishonesty or moral turpitude, in any jurisdiction in the past 10 years; or

(ii) having been found guilty of insider trading or the equivalent in any jurisdiction at any time; or

(iii) having been judged disqualified by any court; or

(iv) having been disqualified by the AFSA; or

(v) a disqualification specified in the Articles of Association; or

• (d) is an undischarged bankrupt.

75. Election, term and removal of directors

(1) The first directors of a Company must be elected by the Incorporators. Subsequent directors must be elected by the Shareholders by Ordinary Resolution, or as otherwise provided by the Articles of Association, for the term that the Shareholders decide.

(2) Each director holds office until the director’s successor takes office or until the director’s earlier death, resignation or removal by Ordinary Resolution or as otherwise provided by the Articles of Association.

(3) A vacancy created by the death, resignation or removal of a director may be filled by Ordinary Resolution or, if the vacancy is not filled by an Ordinary Resolution, by the remaining directors. However:

• (a) any director appointed by the remaining directors is subject to reappointment by Ordinary Resolution at the next General Meeting; and
• (b) if an Ordinary Resolution of reappointment of the director is not passed at the next General Meeting—the director ceases to be a director at the conclusion of the General Meeting.

(4) The number of directors must be fixed by the Articles of Association subject to the requirements of section 74(1) (Directors).

(5) If, at a General Meeting, it is proposed that 2 or more persons be appointed as directors, the appointments must be made by a separate Resolution in respect of each person, unless unanimously agreed otherwise by the Shareholders at the meeting.

76. Duties of Directors

(1) The duties of Directors under sections 77 to 83 and section 85 are owed by each Director of a Company to the Company.

(2) If a person ceases to be a Director, the person continues to be subject to:

• (a) the duty under section 81 (Duty to avoid conflicts of interest), in relation to the exploitation of any property, information or opportunity of which the person became aware when the person was a Director; and
• (b) the duty under section 82 (Duty not to accept benefits from third parties), in relation to things done or omitted to be done by the person before the person ceased to be a Director.

(3) Except as otherwise provided in these Regulations, more than 1 of the duties of Directors may apply in any given case.

(4) The Constitutional Documents of a Company must not include any provision the effect of which would be to weaken the duties of Directors under this Chapter.

77. Duty to act within powers

A Director of a Company must:

• (a) act in accordance with the Constitutional Documents; and
• (b) only exercise the powers of a Director for the purposes for which the powers have been given.

78. Duty to promote success of Company

(1) A Director of a Company must act in the way the Director honestly considers, in good faith, would be most likely to promote the success of the Company for the benefit of its Shareholders as a whole and, in doing so, must have regard, among other matters, to:

• (a) the likely consequences of any decision in the long term; and
• (b) the interests of the Company’s Employees; and
• (c) the need to foster the Company’s business relationships with suppliers, customers and others; and
• (d) the impact of the Company’s operations on the community and the environment; and
• (e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
• (f) the need to act fairly as between Shareholders of the Company.

(2) To the extent that the purposes of the Company consist of or include purposes other than the benefit of its Shareholders, the reference in subsection (1) to the benefit of its Shareholders has effect as if it included those other purposes.

(3) The duty imposed under this section has effect subject to any law applicable to the Company requiring Directors, in certain circumstances, to consider or act in the interests of the Company’s Creditors or customers.

79. Duty to exercise independent judgement

(1) A Director of a Company must exercise independent judgement.

(2) A Director of a Company does not infringe the duty under subsection (1) if the Director acts:

• (a) in accordance with an agreement duly entered into by the Company that restricts the future exercise of discretion by its Directors; or
• (b) in a way authorised by the Constitutional Documents.

80. Duty to exercise reasonable care, skill and diligence

A Director of a Company must exercise the care, skill and diligence that would be exercised by a reasonably diligent person with:

• (a) the general knowledge, skill and experience that may reasonably be expected of a person Exercising the Functions Exercised by the Director in relation to the Company; and
• (b) the general knowledge, skill and experience that the Director has.

81. Duty to avoid conflicts of interest

(1) A Director of a Company must avoid a situation in which the Director has, or can have, a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company.

(2) The duty under subsection (1) applies in particular to the exploitation of any property, information or opportunity.

(3) The duty under subsection (1) does not apply to a conflict of interest arising in relation to a transaction or arrangement if the requirements of section 83 (Duty to declare interest in proposed transaction or arrangement) or 85 (Duty to declare interest in existing transaction or arrangement) are met.

(4) A Director of a Company does not Contravene the duty under subsection (1) if:

• (a) the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; or
• (b) the Directors of the Company have authorised the situation in accordance with the Articles of Association and any applicable provisions of these Regulations and the Rules.

(5) A Company’s Articles of Association may include alternative procedures for avoiding conflicts of interests. A Director does not Contravene the provisions of this section by acting in accordance with the alternative procedures.

(6) In this section: conflict of interest includes a conflict of an interest and a duty and a conflict of duties.

82. Duty not to accept benefits from third parties

(1) A Director of a Company must not accept a benefit from a third party if the benefit is given to the Director:

• (a) because of the Director’s position as a Director of the Company; or
• (b) for doing (or not doing) anything as a Director of the Company; unless the acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.

(2) In this section: conflict of interest includes a conflict of an interest and a duty and a conflict of duties.

83. Duty to declare interest in proposed transaction or arrangement

(1) This section applies if a Director of a Company becomes aware, or ought reasonably to have become aware, that the Director is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the Company.

(2) The Director must declare the nature and extent of the interest to the other Directors of the Company in accordance with section 85 (Duty to declare interest in existing transaction or arrangement).

(3) But the declaration must be made before the proposed transaction or arrangement is entered into. For a declaration under this section, section 85 (Duty to declare interest in existing transaction or arrangement) applies to the Director with any other necessary changes.

84. Breaches of Directors’ duties

If a Director of a Company Breaches any 1 or more of the duties under sections 77 to 83, the Director is taken to have Contravened these Regulations.

85. Duty of Directors to declare interest in existing transaction or arrangement

(1) If a Director of a Company has, directly or indirectly, an interest in a transaction or arrangement entered into by the Company or a Subsidiary of the Company and the Director is aware that the interest conflicts or may conflict, to a material extent, with the interests of the Company or Subsidiary, the Director must unless the Director has previously declared such interest under section 83 (Duty to declare interest in proposed transaction or arrangement), declare to the other Directors of the Company the nature and extent of the Director’s interest in accordance with this section.

(2) The declaration must be made as soon as practicable after the Director becomes aware of the circumstances that gave rise to the duty to make the declaration.

(3) The declaration must be made:

• (a) at a meeting of the Directors; or
• (b) by a general Written notice given to the other Directors.

(4) A declaration made at a meeting of the Directors under subsection (3)(a) must be tabled at, and recorded in the minutes of, the meeting.

(5) A declaration made by way of a general Written notice given to the other Directors under subsection (3)(b) must be tabled at, and recorded in the minutes of, the first meeting of the Directors after the declaration is made or, if it is not reasonably practicable to do so at that meeting, at the next earliest meeting of the Directors.

(6) A notice given to the Company by a Director that the Director is to be regarded as interested in a transaction or arrangement with a specified Person is sufficient declaration of the Director’s interest in any transaction or arrangement entered into with the Person after the notice is given.

(7) If a declaration of interest for section 83 or this section proves to be, or becomes, inaccurate or incomplete, a further declaration must be made, in the same way as the initial declaration.

(8) If a Director of a Company Fails to declare an interest of under this section or section 83, the Company, a Shareholder of the Company or the Registrar may apply to the Court for an order under this subsection. On the application, the Court may make any order that it considers appropriate, including, for example, either or both of the following:

• (a) an order setting aside the relevant transaction or arrangement;
• (b) an order directing the Director to account to the Company for any benefit, gain or profit obtained because of the relevant transaction or arrangement.

(9) However, a transaction or arrangement is not voidable, and a Director is not accountable, under subsection (8) in relation to it if, despite a Failure to comply with this section:

• (a) the transaction or arrangement is ratified by the Company under section 86 (Ratification on interest in existing transaction or arrangement) at a General Meeting; and
• (b) the nature and extent of the Director’s interest in the transaction or arrangement were declared in reasonable detail in the notice calling the General Meeting.

(10) Also, without limiting the Court’s power to order a Director to account for any profit, gain or benefit realised, the Court must not set aside a transaction or arrangement unless it is satisfied that:

• (a) the interests of third parties who have acted in good faith would be unfairly prejudiced if the transaction or arrangement were not set aside; or
• (b) the transaction or arrangement was not reasonable and fair in the interests of the Company at the time it was made.

86. Ratification of interest in existing transaction or arrangement

(1) This section applies to the ratification by a Company of a transaction or arrangement mentioned in section 85(1) (Duty to declare interest in existing transaction or arrangement).

(2) The Company may, by an Ordinary Resolution, ratify the transaction or arrangement, unless its Constitutional Documents prohibit from doing so.

(3) If the Company is a Public Company, any votes cast by the Director or Directors who have the conflict of interest in the transaction or arrangement, and any other Connected Person to such a Director, must be disregarded for the purposes of any Ordinary Resolution mentioned in subsection (2).

(4) In this section:

Connected Person, in relation to a Director, means:

• (a) the spouse, or a child, stepchild or a grand-child, of the Director; or
• (b) a Body Corporate if the Director, alone or together with an individual or individuals mentioned in paragraph (a):

(i) has at least 20% of any share capital of the Body Corporate; or

(ii) is entitled to exercise or control the exercise of more than 20% of the voting power at any general meeting of the Body Corporate; or

• (c) if the Director, or an individual mentioned in paragraph (a), is a partner in a partnership—each partner in the partnership; or
• (d) any other Person declared by the Rules to be a Connected Person for this definition.

87. Prohibition of financial assistance to Directors etc.

(1) Subject to subsection (4), a Company must not provide financial assistance of any of the following kinds to a Director:

• (a) making a loan, issuing a Debt Security or granting a credit facility or other similar form of financial assistance;
• (b) giving a guarantee or security or indemnity in connection with a loan, Debt Security, credit facility or other similar form of financial assistance, whether the financial assistance is provided by the Company or another Person;
• (c) any other form of financial assistance prescribed by the Rules,

unless:

• (d) consent is given by Shareholders attending (in person or by proxy) a General Meeting who together hold not less than 90% of the Shares that are voted at the meeting; and
• (e) all of the Directors of the Company certify that providing the financial assistance would not materially prejudice either of the following:

(i) the interests of the Company and its Shareholders; or

(ii) the Company’s ability to discharge its Liabilities as they fall due.

(2) Any financial assistance provided under subsection (1) must be:

• (a) documented in Writing; and
• (b) before it is provided, recorded in the minutes of a meeting of the Directors of the Company, under signature of all of the Directors, as being provided in accordance with the requirements of that subsection.

(3) Financial assistance may not be provided to a Connected Person for a Director of a Company except in accordance with this section.

(4) Subsection (1) does not apply to the provision of financial assistance by a Company if:

• (a) the financial assistance consists of remuneration paid in the ordinary course to a Director for services as a Director; or
• (b) the financial assistance is for liability indemnity insurance related to the discharge of a Director’s duties to the Company; or
• (c) the Company’s ordinary business includes providing finance and the financial assistance is provided in the ordinary course of that business and on ordinary commercial terms; or
• (d) the financial is of a kind prescribed by the Rules as exempt from this section.

(5) Sections 81 (Duty to avoid conflicts of interest) and 82 (Duty not to accept benefits from third parties) do not apply to any financial assistance provided in accordance with this section.

88. Validity of acts of Director

The acts of a Director are valid despite any defect that may afterwards be found in the Director’s appointment or qualification.

89. Secretary

(1) A Public Company must have at least 1 Secretary.

(2) The Directors of a Public Company must take all reasonable steps to ensure that the Secretary (or each joint Secretary) of the Company is a Person who appears to them to have the necessary knowledge and experience to discharge the Functions of Secretary of the Company and who:

• (a) has held the office of Secretary of a public Body Corporate for at least 3 of the immediately preceding 5 years; or
• (b) is a Person who, because of holding or having held any other position or by being a Shareholder of any other body, appears to the Directors to be capable of discharging the Functions of Secretary of the Company.

(3) A Private Company may have a Secretary.

(4) If a Private Company does not have a Secretary:

• (a) anything authorised or required to be given or sent to, or served on, the Company by being given or sent to, or served on, its Secretary may be given or sent to, or served on, the Company itself and anything addressed to the Secretary is taken to be addressed to the Company; and
• (b) anything else required or authorised to be done by the Secretary may be done by a Director or a Person authorised generally or specifically in that behalf by the Directors.

90. Register of Directors and Secretaries

(1) Every Company must keep, at its registered office, a Register of its Directors and, if applicable, a Register of its Secretaries. The Company must ensure that a register contains the particulars required by the Rules. An election may be made in relation to a Private Company for the information, which otherwise would require to be kept in the Register of Directors and Secretaries, to be kept by the Registrar.

(2) If a Company keeps a register at its registered office, the Company must ensure that the register is open to inspection, during business hours and without charge, by the Registrar or any Shareholder or Director of the Company.

(3) The Company may, by its Articles of Association or a decision in General Meeting, impose reasonable restrictions on the availability of a register for inspection under subsection (2), but must nevertheless ensure that the register is open to inspection for at least 2 hours on each day that its registered office is open.

(4) If a Company Fails to make a register available for inspection under subsection (2) by the Registrar or a Shareholder or Director of the Company, the Registrar may, by Written notice given to the Company, direct the Company to immediately make the register available for inspection by that Person. The Company must comply with the direction.

(5) Contravention of subsections (1) to (4) is punishable by a fine.

(6) A Private Company may make an election to keep information in the Register kept by the Registrar.

(7) An election may be made under this section by:

• (a) the applicant wishing to incorporate a Private Company under these Regulations; or
• (b) the Private Company itself once it is incorporated.

(8) In paragraph (b) of subsection (7), the election is of no effect, without prior agreement of all the Shareholders of the Private Company at the particular time to the making of the election.

(9) An election under this section is made by giving notice of election to the Registrar.

(10) If the notice is given by Person(s) wishing to incorporate a Private Company:

• (a) it must be given together with the application for the incorporation under section 13; and
• (b) it must be accompanied by a statement containing all the information prescribed by the Rules.

(11) If the notice is given by the Private Company, it must be accompanied by:

• (a) a statement by the Private Company that all the Shareholders of the Private Company have assented to the making of the election; and
• (b) a statement containing all the information prescribed by the Rules to be contained in the Private Company's Register of Directors and Secretaries as at the date of the notice in respect of matters that are current as at that date.

(12) An election made under subsection (6) takes effect when the notice of election is registered by the Registrar.

(13) The election remains in force until either:

• (a) the Private Company ceases to be a Private Company; or
• (b) a notice of withdrawal sent by the Private Company under subsection (17) is registered by the Registrar, whichever occurs first.

(14) While an election under subsection (6) is in force, a Private Company must continue to keep a Register of Directors and Secretaries in accordance with the Rules, containing all the information that was required to be stated in that Register as at the time immediately before the election took effect, but the Private Company does not have to update that Register to reflect any changes that occur after that time.

(15) The date to be recorded in the Register kept by the Registrar is to be the date on which the document containing that information is registered by the Registrar.

(16) During the period when an election under subsection (6) is in force, a Private Company must deliver to the Registrar any information in accordance with the Rules, which the Private Company would, in the absence of any such election, have been obliged under these Regulations to enter in its Register of Directors and Secretaries and it must do so as soon as reasonably practicable after any relevant change but in any event within a period of 14 days.

(17) A Private Company may by giving notice of withdrawal to the Registrar withdraw an election made by or in respect of it under subsection (6), where:

• (a) the withdrawal takes effect when the notice is registered by the Registrar;
• (b) the effect of withdrawal is that the Private Company's obligation under subsection (1) to keep a Register of Directors and Secretaries applies from then on with respect to the period going forward;
• (c) the Private Company must place a note in its Register of Directors or Secretaries—

(i) stating that the election under subsection (6) has been withdrawn;

(ii) recording when that withdrawal took effect; and

(iii) indicating that information about its Directors or Secretaries relating to the period when the election was in force that is no longer current is available for public inspection on the Register kept by the Registrar.

(18) All notices and information to be delivered to the Registrar under this section must be made in Writing.

(19) Contravention of subsections (6) to (18) is punishable by a fine.

91. Assumptions in relation to Directors and Secretary

(1) A Person dealing with a Company is entitled to assume that anyone who appears, from the information that is available to the public in the Register, or a register kept by the Company under these Regulations, to be a Director or Secretary of the Company:

• (a) has been duly appointed; and
• (b) has authority to Exercise the Functions customarily Exercised by a Director or Secretary of a similar Company.

(2) A Company is not entitled to assert in proceedings in relation to dealings of the Company that any assumption under subsection (1) is incorrect.

(3) However, a Person is not entitled to make an assumption under subsection (1) if at the time of the dealing with the Company the Person knew or could have reasonably suspected that the assumption was incorrect.

92. Disqualification orders

(1) Without limiting any other powers available to the Registrar, if the Registrar considers that it is in the public interest that an individual should not, without the leave of the Court, be a Director of, or in any way (whether directly or indirectly) be concerned or take part in the management of, a Company, the Registrar may apply to the Court for an order to that effect against the Person.

(2) The Court may make the order applied for if satisfied that the Person’s conduct (including, for example, any Breach by the person of any 1 or more of the duties under sections 77 to 83 and section 85) makes the person unfit to be concerned or take part in the management of a Company.

(3) An order under subsection (2) may be made:

1. (a) in the case of a first offence, for the period, not longer than 15 years; or
2. (b) in the case of a repeated offence, for an unlimited period, as the Court considers appropriate.

(4) A Person must not Contravene an order under subsection (2).

(5) Contravention of subsection (4) is punishable by a fine.

93. Participation in meetings

(1) Subject to the Articles of Association, a Shareholder may participate in a meeting by phone or by other similar means of communication if each Shareholder present at the meeting can hear what is said by any other Shareholder present at the meeting, and each Shareholder so participating at the meeting is taken to be present at the meeting.

(2) Subject to the Articles of Association, a Director may participate in a meeting by phone or other similar means of communication if each Director present at the meeting can hear what is said by any other Director present at the meeting, and each Director so participating at the meeting is taken to be present at the meeting.

94. Annual General Meeting

(1) A Private Company is not required to hold an Annual General Meeting unless expressly required to do so under its Articles of Association.

(2) Every Public Company must hold a General Meeting as its Annual General Meeting within 6 months of the end of each financial year (in addition to any other meetings held during that period). The Company must ensure that not more than 18 months elapses between the date of an Annual General Meeting and the date of the next.

(3) Contravention of subsection (2) is punishable by a fine.

(4) A notice calling an Annual General Meeting of a Public Company must state that the meeting is an Annual General Meeting.

95. Meeting requests

(1) On a Shareholders’ request, the Directors or, if appointed, the Secretary, of a Company must, despite anything in the Articles of Association, promptly call a General Meeting or a meeting of holders of any class of Shares. The meeting must be held as soon as practicable, but not later than 2 months after the day the request is made (the request day).

(2) For this section, a Shareholders’ request is a request of Shareholders of the Company holding, on the request day, not less than 5% of the share capital of the Shares that on that day have the right to vote at the meeting requested.

(3) The Shareholders’ request must state the purpose of the meeting, be made by or on behalf of each Shareholder making the request and be deposited at the registered office of the Company. The request may consist of several Documents in similar form each signed by or on behalf of 1 or more of the Shareholders making the request.

(4) If, within 21 days after the request day, the Directors or Secretary of the Company do not call the requested meeting to be held within 2 months after the request day, made the Shareholders making the request, or any of them representing more than 1/2 of the total voting rights of all of them, may themselves call a meeting. The meeting so called must be held within 3 months after the request day.

(5) A meeting called under this section must be called in the same way, as nearly as possible, as the in which meetings are to be called by Directors or Secretary.

96. Registrar’s power to call meeting in default

(1) If a meeting of a Company is not held as required by section 94 (Annual General Meetings) or 95 (Meeting requests), the Registrar may, on the application of any Director or Shareholder of the Company, call, or direct the Company to call, the meeting.

(2) If a Company is given a direction under subsection (1), the Company must not, without reasonable excuse, fail to comply with the direction. Contravention of this subsection is punishable by a fine.

97. Notice of meetings

(1) Any General Meeting of a Private Company must be called by at least 7 days Written notice. Any General meeting of a Public Company (other than an Annual General Meeting of a Public Company or an adjourned such meeting) must be called by at least 14 days Written notice. An Annual General Meeting of a Public Company must be called by at least 21 days Written notice.

(2) If a General Meeting is called by shorter notice than that specified in subsection (1), it is taken to have been duly called if the required majority of the Shareholders agree that the meeting should be taken to have been duly called.

(3) For subsection (2), the required majority is:

• (a) for a Private Company—a majority together holding not less than 90% of the share capital represented by the Shares giving a right to attend and vote at the General Meeting; and
• (b) for a General Meeting other than an Annual General Meeting of a Public Company—a majority together holding not less than 95% of the share capital represented by the Shares giving a right to attend and vote at the General Meeting; and
• (c) for an Annual General Meeting of a Public Company—all Shareholders of the Company.

(4) A notice of a General Meeting of a Company must:

• (a) set out the time, date and place for the General Meeting; and
• (b) state the general nature of the General Meeting’s business; and
• (c) set out the intention to propose any Ordinary Resolution or Special Resolution and, if so, set out the terms of the Resolution; and
• (d) for a Public Company—include a copy of any accounts and auditor’s report that are to be laid before the General Meeting.

98. General provisions about meetings and votes

The following provisions apply to any General Meeting of a Company or of the holders of any class of Shares in a Company unless the Articles of Association provide otherwise:

1. (a) a notice of every meeting must be given to every Shareholder entitled to receive it:
2. (i) by delivering or posting it to the Shareholder’s registered address; or

(ii) in the electronic form (if any) agreed to by the Shareholder; or

(iii) by making it available on the website (is any) agreed to by the Shareholder; or

(iv) in the other way or form (if any) agreed to by the Shareholder;

1. (b) except for a Company with a single Shareholder, at any General Meeting of the Company, 2 Shareholders personally present or represented by proxy are a quorum;
2. (c) at any meeting dealing with a variation of any class rights other than an adjourned meeting, the quorum is the number of Shareholders holding or representing by proxy at least 1/3 in nominal value of the issued Shares of the class, and at an adjourned meeting,1 Shareholder holding Shares of the class or the Shareholder’s proxy is a quorum;
3. (d) any Shareholder elected by the Shareholders present at the meeting may chair the meeting;
4. (e) on a show of hands, every Shareholder present in person at the meeting has 1 vote and, on a poll, every Shareholder has 1 vote for every Share held by the Shareholder;
5. (f) if practicable, voting can be arranged in any other form, determined in the Articles of Association.

99. Representation of Body Corporate at meetings

(1) A Body Corporate may, by resolution of its Directors or other governing body, authorise any Person to act as its representative at any meeting of a Company, the holders of any class of Shares of a Company or the Creditors of a Company.

(2) A Person authorised under subsection (1) to attend a meeting for a Body Corporate is entitled to exercise the same powers for the Body Corporate as the Body Corporate could exercise if it were an individual Shareholder or Creditor of the Company.

100. Resolutions in writing of Private Companies

(1) Subject to any restrictions in a Private Company’s Articles of Association, anything that may be done by a Resolution of the Company passed at a Shareholders’ meeting (other than a Resolution to remove a Director or a Person who is registered as an auditor under these Regulations) may be done either by a resolution in writing in accordance with this section.

(2) A resolution in writing is passed as an Ordinary Resolution if it is passed by Shareholders representing a simple majority of the total voting rights of Shareholders who, at the relevant time, would be entitled to vote.

(3) A resolution in writing is passed as a Special Resolution only if:

• (a) it stated that it was proposed as a Special Resolution; and
• (b) it is passed by Shareholders representing not less than 75% of the total voting rights of Shareholders who, at the relevant time, would be entitled to vote.

(4) An Ordinary Resolution or Special Resolution in writing may consist of several instruments in the same form each signed by or on behalf of 1 or more Shareholders.

(5) An Ordinary Resolution or Special Resolution under this section is taken to be passed on the day the instrument, or the last of several instruments, is last signed or, if the resolution specifies a later date, on that date.

(6) Any Document attached to an Ordinary Resolution or Special Resolution in writing under this section is taken to have been laid before a meeting of the Shareholders signing the Ordinary Resolution or Special Resolution.

(7) Section 104 (Minutes and examination of minute books) applies to an Ordinary Resolution or Special Resolution in writing under this section as if it had been passed at a meeting.

(8) This section does not affect or limit any provisions in the Articles of Association relating to the effectiveness of the consent of Shareholders, or any class of Shareholders, of a Private Company given to any Document, or anything else, otherwise than at a meeting of them.

101. Recording of decisions by sole Shareholder

(1) If:

• (a) a Company has only 1 Shareholder; and
• (b) the Shareholder takes a decision that may be taken by the Company in a General Meeting and has effect as if agreed by the Company in a General Meeting; and
• (c) the decision is not taken by way of Ordinary Resolution in writing; the Shareholder must provide the Company with a Written record of the decision.

(2) Failure to comply with subsection (1) does not affect the validity of the decision.

102. Proxies

(1) A Shareholder of a Company entitled to attend and vote at a General Meeting or at a meeting of the holders of any class of Shares is entitled to appoint, by Written notice to the Company, another Person (whether a Shareholder or not) as the Shareholder’s proxy to attend and vote instead of the Shareholder.

(2) A proxy appointed to attend and vote for a Shareholder has the same rights as the Shareholder, including, for example:

• (a) to speak at the meeting; and
• (b) to vote (but only to the extent allowed by the appointment or the Articles of Association); and
• (c) to join in a demand for a poll.

(3) A notice calling a meeting of a Company must contain a reasonably prominent statement that a Shareholder entitled to attend and vote is entitled to appoint a proxy (or, if permitted, 1 or more proxies) to attend and vote instead of the Shareholder, and that a proxy need not also be a Shareholder.

103. Demand for poll

(1) A provision in the Articles of Association is void in so far as it would have the effect either of:

• (a) excluding the right to demand a poll at a General Meeting, or at a meeting of the holders of any class of Shares, on a question, other than the election of the chair of the meeting or the adjournment of the meeting; or
• (b) making ineffective a demand for a poll on any such question that is made either:

(i) by not less than 5 Shareholders having the right to vote on the question; or

(ii) by a Shareholder or Shareholders representing not less than 10% of the total number of Shares having the right to a vote on the question.

(2) The instrument appointing a proxy to vote at such a meeting is taken also to provide authority to demand or join in demanding a poll and, for subsection (1), a demand by a Person as proxy for a Shareholder is the same as a demand by the Shareholder.

(3) On a poll taken at such a meeting, a Shareholder entitled to more than 1 vote need not, if that Shareholder votes (in person or by proxy), use all the Shareholder’s votes in the same way.

104. Minutes and examination of minute books

(1) Every Company must ensure that minutes of all proceedings at General Meetings, meetings of the holders of any class of Shares, and meetings of its Directors and of committees of Directors, are entered in books kept for that purpose. The Company must ensure that the names of the Directors present at each of those meetings are recorded in the minutes.

(2) If the minutes purport to be signed by the chair of the meeting at which the proceedings took place or by the chair of the next meeting, the minutes are evidence of the proceedings.

(3) If minutes of a meeting have been made in accordance with this section, then, unless the contrary is proved, the meeting is taken to have been duly called and held, and all proceedings that took place at the meeting are taken to have duly taken place.

(4) A Company must ensure that the books containing the minutes of the General Meetings of the Company, or of meetings of the holders of a class of Shares of the Company, are kept at the Company’s registered office, and are open to inspection during business hours by a Shareholder without charge. The books can be stored using a system of mechanical or electronic data processing or any other medium that is capable of reproducing any required information in intelligible written form within a reasonable time.

(5) A Shareholder of a Company may, by giving the Company a Written request and paying the reasonable amount (if any) required by the Company, ask the Company for a copy of any minutes mentioned in subsection (4) (other than minutes of a meeting of the holders of a class of Shares if the Shareholder is not a holder of that class of Shares). The Company must, within 7 days after the day it receives the request and payment of any required amount, give the copy of the minutes to the Shareholder.

(6) If a Company Contravenes subsection (4) or (5) in relation to a Shareholder of the Company, the Registrar may, by Written notice given to the Company, direct the Company to immediately comply with the subsection in relation to the Shareholder. If a Company is given a direction under this subsection, the Company must comply with the direction.

105. Takeover Offers

(1) In this Chapter:

Takeover Offer, in relation to a Company, means an offer to acquire all the Shares, or all the Shares of any class or classes, in the Company (other than Shares that at the date of the offer are already held by The Offeror), if the offer is on terms that are the same in relation to all the Shares to which the offer relates or, if those Shares include Shares of different classes, in relation to all the Shares of each relevant class.

(2) In subsection (1):

Shares means Shares that:

1. (a) have been allotted on the date of the offer; or
2. (b) are subsequently allotted before a date specified in or determined in accordance with the terms of the offer; or
3. (c) any rights convertible into Shares before a date specified or determined in accordance with the term of the offer.

(3) The terms offered in relation to any Shares are, for this section, to be treated as being the same in relation to all the Shares, or all the Shares of a class to which the offer relates, despite any variation permitted by subsection (4).

(4) A variation is permitted if:

1. (a) the law of a country or territory outside the AIFC precludes the acceptance of an offer in that jurisdiction in the form or the forms specified, or precludes it except after compliance by The Offeror with conditions with which it is unable to comply or that it regards as unduly onerous; and
2. (b) the variation is such that the Persons by whom the acceptance of an offer in that form is precluded are able to accept an offer in a different form but of substantially equivalent value.

(5) The reference in subsection (1) to Shares already held by The Offeror includes a reference to Shares that The Offeror has an unconditional right to acquire under an unconditional option to acquire.

(6) If the terms of an offer make provision for their revision and for an acceptance on the previous terms to be treated as an acceptance on the revised terms, the revision must not be regarded for this Chapter as the making of a fresh offer and a reference in this Chapter to the date of the offer is made is accordingly to be taken to be a reference to the date the original offer was made.

(7) In this Chapter:

The Company means the Company whose Shares are the subject of the Takeover Offer.

The Offeror means, subject to section 111 (Joint offers), the Person making the Takeover Offer.

106. Right of The Offeror to buy out minority Shareholders

(1) If, for a Takeover Offer that does not relate to Shares of different classes, The Offeror has, because of acceptances of the offer, acquired or contracted to acquire not less than9/10 in value of the Shares to which the offer relates, The Offeror may, within 120 days after the day the Takeover Offer closes, give notice to the holder of any Shares to which the offer relates that The Offeror has not acquired, or contracted to acquire, that The Offeror desires to acquire those Shares.

(2) If, for a Takeover Offer relates to Shares of different classes, The Offeror has, because of acceptances of the offer, acquired or contracted to acquire not less than 9/10 in value of the Shares of any class to which the offer relates, The Offeror may, within 120 days after the day the Takeover Offer closes, give notice to the holder of any Shares of that class that The Offeror has not acquired, or contracted to acquire, that The Offeror desires to acquire those Shares.

(3) The Offeror must not give a notice under subsection (1) or (2) unless The Offeror has acquired, or contracted to acquire, the Shares necessary to satisfy the minimum specified in the subsection within 4 months after the date of the offer, and must not give the notice more than 2 months after the day The Offeror acquires, or contracts to acquire, the shares necessary to satisfy that minimum.

(4) When The Offeror gives the first notice in relation to an offer, The Offeror must send a copy of it to The Company together with a signed declaration by The Offeror stating that the conditions for giving the notice are satisfied. The Offeror must not make the declaration unless The Offeror has reasonable grounds for believing it to be true.

(5) If The Offeror is a Body Corporate, the declaration must be signed by a Director of the Body Corporate for The Offeror. The Director must not make the declaration unless the Director has reasonable grounds for believing it to be true.

(6) Contravention subsection (4) or (5) is punishable by a fine.

(7) In a proceeding against a Person for a Failure to send a copy of a notice as required by subsection (4), it is a defence for the Person to prove that the Person took reasonable steps to ensure that the subsection was complied with.

(8) Subsection (9) applies if, during the period within which a Takeover Offer can be accepted, The Offeror acquires, or contracts to acquire, any of the Shares to which the offer relates otherwise than because of acceptances of the offer.

(9) If this subsection applies and either:

• (a) the value (the acquisition value) for which the Shares are acquired, or contracted to be acquired, does not, at that time, exceed the value that is receivable by an acceptor under the terms of the offer; or
• (b) those terms are subsequently revised so that, when the revision is announced, the acquisition value, at the time mentioned in paragraph (a) no longer exceeds the value that w is receivable by an acceptor under those terms;

The Offeror must be treated for this section as having acquired or contracted to acquire those Shares because of acceptances of the offer; but in any other case those Shares must be treated as excluded from those to which the offer relates.

107. Effect of notice under section 106

(1) Subject to section 110 (Applications to Court), the following provisions have effect if a notice is given in respect of any Shares under section 106 (Right of The Offeror to buy out minority Shareholders).

(2) The Offeror is entitled and bound to acquire the Shares on the terms of the offer.

(3) If the terms of the offer give the holder of any Shares a choice of payment for the Shares, the notice must give particulars of the choice and state:

• (a) that the holder of the Shares may, within 6 weeks after the date of the notice, indicate the holder’s choice by a Written communication sent to The Offeror at an address specified in the notice; and
• (b) which payment specified in the offer is to be taken as applying if holder indicate the holder’s choice; and the terms of the offer mentioned in subsection (2) have effect accordingly.

(4) Subsection (3) applies whether or not any time limit or other conditions applying to the choice under the terms of the offer can still be met. If the payment chosen by the holder of the Shares:

• (a) is not cash and The Offeror is no longer able to make that payment; or
• (b) was to have been made by a third party who is no longer bound or able to make the payment; the payment must be taken to consist of an amount of cash payable by The Offeror that, at the date of the notice, is equivalent to the chosen payment.

(5) At the end of 6 weeks after the date of the notice, The Offeror must immediately:

• (a) send a copy of the notice to The Company; and
• (b) make payment to The Company on behalf of the holders of the Shares to which the notice relates.

(6) The copy of the notice sent to The Company under subsection (5)(a) must be accompanied by an instrument of transfer executed on behalf of the Shareholder by a Person appointed by The Offeror. On receipt of that instrument, The Company must register The Offeror as the holder of those Shares.

(7) If the payment referred to in subsection (5)(b) is to be made in Securities to be issued by The Offeror, the reference in that section to making payment is a reference to the issue of the Securities to The Company on behalf of the holders of the Shares to which the notice relates.

(8) Any amount or other payment received by The Company under subsection (5)(b) is not the property of The Company but must be held by The Company on behalf of the Person entitled to the Shares in respect of which the amount or other payment was received.

(9) Any amount received, including any dividend or other amount accruing from any other payment, by The Company under subsection (5)(b) must be paid into a separate bank account, the balance of which bears interest at an appropriate rate and can be withdrawn by the notice (if any) that is appropriate.

108. Right of minority Shareholder to be bought out by The Offeror

(1) If, for a Takeover Offer does not relate to Shares of different classes, at any time before the end of the period within which the offer can be accepted:

• (a) The Offeror has, because of acceptances of the offer, acquired or contracted to acquire some (but not all) of the Shares to which the offer relates; and
• (b) those Shares, with or without any other Shares in the Company that The Offeror has acquired, or contracted to acquire, amount to not less than 9/10 in value of all the Shares in the Company;

the holder of any Shares to which the offer relates who has not accepted the offer may, by a Written communication addressed to The Offeror, require The Offeror to acquire the Shares.

(2) If, subsection (1) does not apply to a Takeover Offer and, at any time before the end of the period within which the offer can be accepted:

• (a) The Offeror has, because of acceptances of the offer, acquired or contracted to acquire some (but not all) of the Shares of any class to which the offer relates; and
• (b) those Shares, with or without any other Shares of that class that The Offeror has acquired, or contracted to acquire, amount to not less than 9/10 in value of all the Shares of that class;

the holder of any Shares of that class who has not accepted the offer may, by a Written communication addressed to The Offeror, require The Offeror to acquire the Shares.

(3) No later than 1 month after the end of the period within which the offer can be accepted The Offeror must give any Shareholder or holder of Shares of that class who has not accepted the offer a notice setting out:

• (a) the rights that are exercisable by the Shareholder or holder of Shares of that class under subsection (1) or (2); and
• (b) the period within which the rights are exercisable; and, if the notice is given before the end of the period within which the offer can be accepted, the notice must state that the offer is still open for acceptance.

(4) The notice under subsection (3) may specify a period (not less than 3 months after the end of the period within which the offer can be accepted) for the exercise of the rights given by this section. If the notices specify such a period, the rights may not be exercised after the end of that period.

(5) Subsection (3) does not apply to any Shares if The Offeror has given the Shareholder notice in respect of the Shares under section 106 (Right of The Offeror to buy out minority Shareholders).

(6) Contravention of subsection (3) is punishable by a fine.

(7) If The Offeror is not a Company, then, in a proceeding against The Offeror for an alleged Failure to comply this section, it is a defence for The Offeror to prove that The Offeror took all reasonable steps to ensure that this section was complied with.

109. Effect of requirement under section 108

(1) Subject to section 110 (Applications to Court), the following provisions have effect if a Shareholder exercises the Shareholder’s rights in respect of any Shares under section 108 (Right of minority Shareholder to be bought out by The Offeror).

(2) The Offeror is entitled and bound to acquire the Shares on the terms of the offer or, if other terms are agreed, on the other terms.

(3) If the terms of the offer give the holder of the Shares a choice of payment for the Shares, the holder of the Shares may, in accordance with section 107(3) (Effect of notice under section 106), indicate the holder’s choice when requiring The Offeror to acquire them.

(4) Subsection (3) applies whether or not any time limit or other conditions apply to the choice under the terms of the offer can still be met. If the payment chosen by the holder of the Shares:

• (a) is not cash and The Offeror is no longer able to make that payment; or
• (b) was to have been made by a third party who is no longer bound or able to make that payment; the payment must be taken to consist of an amount of cash payable by The Offeror that, on the day the holder of the Shares required The Offeror to acquire them, is equivalent to the chosen payment.

110. Applications to Court

(1) If a notice is given under subsection 106 (Right of The Offeror to buy out minority Shareholders) to the holder of any Shares, the Court may, on an application made by the holder within 6 weeks after the day the notice was given:

• (a) order that The Offeror is not be entitled and bound to acquire the Shares; or
• (b) specify terms of acquisition different from those of the offer.

(2) If an application to the Court under subsection (1) is pending at the end of the period mentioned in section 107(5) (Effect of notice under section 106), then, unless otherwise ordered by the Court, that section does not have effect until the application has been disposed of.

(3) If the holder of any Shares exercises the holder’s rights under section 108 (Right of minority Shareholder to be brought out by The Offeror), the Court may, on an application made by the holder or The Offeror, order that the terms on which The Offeror is entitled and bound to acquire the Shares are the terms that the Court considers appropriate.

(4) On an application made under subsection (1) or (3) the Court may not require consideration that is:

• (a) a higher value than the value (the offer value) specified in the notice containing the terms of the offer to be paid for the Shares to which the application relates, unless the holder of the Shares shows that the offer value would be unfair; or
• (b) a lower value than the offer value.

(5) No order for costs may be made against a Shareholder making an application under subsection (1) or (3), unless the Court considers:

• (a) that the application was unnecessary, improper or vexatious; or
• (b) that there has been unreasonable conduct by the Shareholder during the proceedings on the application.

(6) If a Takeover Offer has not been accepted to the extent necessary to entitle The Offeror to give notices under section 106(1) or (2), the Court may, on the application of The Offeror, make an order authorising The Offeror to give notices under section 106 (1)or (2) if satisfied:

• (a) that The Offeror has, after reasonable enquiry, been unable to trace 1 or more of the Persons holding Shares to which the offer relates; and
• (b) that the Shares that The Offeror has acquired, or contracted to acquire, because of acceptances of the offer, together with the Shares held by the Person or Persons mentioned in paragraph (a), total not less than the minimum applying under section 106(1)or (2) and
• (c) that the terms offered are fair and reasonable.

(7) However, the Court may not make an order under subsection (6) unless it considers that it is just and equitable to make the order having regard, in particular, to the number of Shareholders who have been traced but have not accepted the offer.

111. Joint offers

(1) A Takeover Offer may be made by 2 or more Persons jointly, and in that event, this Chapter has effect with the following modifications.

(2) The conditions for the exercise of the rights given by sections 106 (Right of The Offeror to buy out minority Shareholders) and 108 (Right of minority Shareholder to be brought out by The Offeror) are satisfied by the joint offerors acquiring, or contracting to acquire, the necessary Shares jointly (as respects acquisitions because of acceptances of the offer) and either jointly or separately (in other cases) and, subject to the following provisions, the rights and obligations of The Offeror under those sections and sections 107 (Effect of notice under section 106) and 109 (Effect of requirement under section 108) are respectively joint rights and joint and several obligations of the joint offerors.

(3) It is sufficient compliance with any provision of those sections requiring or authorising a notice or other Document to be given or sent by or to the joint offerors that it is given or sent by or to any of them, except that the declaration required by section 106(4) must be made by all of them and, for a joint offeror that is a Body Corporate, signed by a Director of the Body Corporate.

(4) In sections 105, 107(7) and 112, a reference to The Offeror is a reference to the joint offerors or any of them.

(5) In section 107(4)(a), the reference to The Offeror being no longer able to make the payment is a as reference to none of the joint offerors being able to do so.

(6) In section 107(6), a reference to The Offeror is a reference to the joint offerors or such of them as they may determine.

(7) In section 110, a reference to The Offeror is a reference to the joint offerors, except that any application under section 110(3) or (6) may be made by any of them. However, the reference in section 110(6)(a) to The Offeror having been unable to trace 1 or more of the Persons holding Shares is a reference to none of the joint offerors having been able to do so.

112. Associates

(1) The requirement in section 105(1) (Takeover Offers) that a Takeover Offer must extend to all the Shares, or all the Shares of any class or classes, in a Company may be satisfied even though the offer does not extend to Shares that associates of The Offeror hold or have contracted to acquire. Shares that an associate holds or has contracted to acquire, whether at the time when the offer is made or subsequently, must be disregarded for the purposes of any reference in this Chapter to the Shares to which a Takeover Offer relates.

(2) If, during the period within which a Takeover Offer can be accepted, any associate of The Offeror acquires, or contracts to acquire, any of the Shares to which the offer relates, then, if the condition specified in section 106(9)(a) or (b) (Right of The Offeror to buy out minority Shareholders) is satisfied in respect of those Shares, the Shares must be treated for section 106 as Shares to which the offer relates.

(3) In section 108(1)(b) and (2)(b) (Right of minority Shareholder to be bought out by The Offeror), the reference to Shares that The Offeror has acquired or contracted to acquire includes a reference to Shares that any associate of The Offeror has acquired or contracted to acquire.

(4) In this section: associate, in relation to The Offeror, means any of the following:

1. (a) a nominee of The Offeror;
2. (b) a Holding Company, Subsidiary or fellow Subsidiary of The Offeror or a nominee of such a Holding Company, Subsidiary or fellow Subsidiary;
3. (c) a Body Corporate in which The Offeror has a substantial interest.

(5) For subsection (4), a Company is a fellow Subsidiary of another Body Corporate if both are Subsidiaries of the same Body Corporate, but neither is a Subsidiary of the other.

(6) For subsection (4), The Offeror has a substantial interest in a Body Corporate if:

1. (a) the Body Corporate or its Directors are accustomed to act in accordance with The Offeror’s directions or instructions; or
2. (b) The Offeror is entitled to exercise or control the exercise of 1/2 or more of the voting power at General Meetings of the Body Corporate; or
3. (c) The Offeror owns or controls directly or indirectly more than 20% of the share capital of the Body Corporate.

(7) If The Offeror is an individual, The Offeror’s associates also include The Offeror’s spouse and any child, stepchild or grandchild of The Offeror.