Companies Act 2014 section 111

Effect of company's failure to redeem or purchase

Section 111 deals with what happens when a company fails to redeem or purchase shares it was obliged to redeem or purchase, including the consequences during a winding up.

• A company is not liable in damages for failing to redeem or purchase redeemable shares, shares converted into redeemable shares, or shares it agreed to buy back
• A court cannot order specific performance if the company can demonstrate it lacks sufficient distributable profits to fund the redemption or purchase
• If the company enters winding up before redeeming or purchasing the shares, the terms of the redemption or purchase can generally still be enforced, and the shares are treated as cancelled once redeemed or purchased
• In a winding up, all other creditors and preferred shareholders must be paid before any amounts owed for the redemption or purchase of these shares

---