Companies Act 2014 section 1082

Restriction on distribution of assets

Section 1082 restricts when and how a public limited company (PLC) may distribute its assets, ensuring that distributions do not erode the company's essential capital base.

• A PLC may only make a distribution if its net assets are at least equal to the total of its called-up share capital plus its undistributable reserves, and the distribution must not reduce net assets below that total.
• Undistributable reserves include the PLC's undenominated capital, the excess of accumulated unrealised profits over accumulated unrealised losses (adjusted for prior capitalisations and capital reductions), and any other reserves that legislation or the company's constitution prohibit from being distributed.
• Certain definitional provisions from section 117 of the Act (subsections (4) to (8)) also apply for the purposes of this section, covering matters such as how profits and losses are to be determined.
• Uncalled share capital must not be treated as an asset in any financial statement used for the purposes of this section, thereby excluding it from the net assets calculation.