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.