Taxes Consolidation Act 1997 section 132

Matters to be treated or not treated as repayments of share capital

Section 132 sets out the rules for determining when a repayment of share capital, following a bonus issue of shares, is treated as a distribution rather than a genuine repayment of capital.

• Where a company has made a bonus issue of shares (on or after 27 November 1975), any subsequent repayment of share capital in respect of those shares is not treated as a repayment of capital — and is therefore treated as a distribution — unless the total repayments exceed the amount of the bonus issue.
• Where shares are issued at a premium representing new consideration, the premium forms part of the share capital for the purpose of determining whether a distribution is a repayment of capital; however, a premium paid on the redemption of shares is not itself treated as a repayment of capital.
• For these purposes, all shares of the same class are treated as representing the same share capital, and shares issued in respect of, converted into, or exchanged for other shares are likewise treated as representing the same capital.
• For non-close companies, the restriction does not apply where the bonus shares are not redeemable and the repayment takes place more than 10 years after the bonus issue.