Companies Act 2014 section 320

Holding of own shares or shares in holding undertaking

Section 320 deals with how a company must account for any shares it holds in itself or in its holding undertaking, including the presentation in financial statements and the required note disclosures.

• Own shares held by a company (or by a nominee on its behalf) must not be shown as an asset; instead, the cost is deducted from capital and reserves, which in turn restricts distributable profits
• Where a company holds shares in its holding undertaking, the cost of those shares must likewise restrict the company's profits available for distribution
• If a company holds shares in its holding company, the cost must also be shown as a deduction from group capital and reserves in the holding company's group financial statements
• Detailed note disclosures are required covering the number, nominal value, movements, reasons for acquisition, proportion of called-up share capital, and any resulting restrictions on distributable profits