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PART III |
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Capital and Dividends |
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17A. |
Subject to
any limitations or provisions to the contrary in its Memorandum or Articles,
the unissued shares and treasury shares of a company incorporated under this
Act shall be at the disposal of the directors who may, without limiting or
affecting any rights previously conferred on the holders of any existing
shares or class or series of shares, offer, allot, grant options over or
otherwise dispose of shares to such persons, at such times and upon such
terms as the company may, by resolution of directors, determine. |
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18. |
No share
in a company incorporated under this Act may be issued until the
consideration in respect of the share is fully paid, and when issued the
share is for all purposes fully paid and non-assessable save that a share
issued for a promissory note or other written obligation for payment of a
debt may be issued subject to forfeiture in the manner prescribed in section
19A. |
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19. |
Subject to
any limitations in the Memorandum or Articles, each share in a company
incorporated under this Act shall be issued for money, services rendered,
personal property (including other shares, debt obligations or other
securities in the company), an estate in real property, a promissory note or
other binding obligation to contribute money or property, or any combination
thereof. |
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19A. |
(1) |
The
Memorandum or Articles, or an agreement for the subscription of shares, of a
company incorporated under this Act may contain provisions for the
forfeiture of shares for which payment is not made pursuant to a promissory
note or other written binding obligation for payment of a debt. |
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(2) |
Any
provision in the Memorandum or Articles, or in an agreement for the
subscription of shares of a company incorporated under this Act providing
for the forfeiture of shares shall contain a requirement that written notice
specifying a date for payment to be made be served on the member who
defaults in making payment pursuant to a promissory note or other written
binding obligation to pay a debt. |
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(3) |
The
written notice referred to in subsection (2) shall name a further date not
earlier than the expiration of 14 days from the date of service of the
notice on or before which the payment required by the notice is to be made
and shall contain a statement that in the event of non-payment at or before
the time named in the notice the shares, or any of them, in respect of which
payment is not made will be liable to be forfeited. |
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(4) |
Where a
notice has been issued under this section and the requirements of the notice
have not been complied with, the directors may, at any time before tender of
payment, by resolution of directors forfeit and cancel the shares to which
the notice relates. |
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(5) |
The
company is under no obligation to refund any moneys to the member whose
shares have been cancelled pursuant to subsection (4) and that member shall
be discharged from any further obligation to the company. |
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20. |
(1) |
Subject to
any limitations in the Memorandum or Articles, shares in a company
incorporated under this Act may be issued for such amount as may be
determined from time to time by the directors, except that in the case of
shares with par value, the amount shall not be less than the par value; and,
in the absence of fraud, the decision of the directors as to the value of
the consideration received by the company in respect of the issue is
conclusive, unless a question of law is involved. |
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(2) |
A share
issued by a company incorporated under this Act upon conversion of, or in
exchange for, another share or a debt obligation or other security in the
company, shall be treated for all purposes as having been issued for money
equal to the consideration received or deemed to have been received by the
company in respect of the other share, debt obligation or security. |
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(3) |
Repealed
by No. 10 of 1990. |
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21. |
Subject to
any limitations or provisions to the contrary in its Memorandum or Articles,
a company incorporated under this Act may issue fractions of a share and
unless and to the extent otherwise provided in the Memorandum or Articles, a
fractional share has the corresponding fractional liabilities, limitations,
preferences, privileges, qualifications, restrictions, rights and other
attributes of a whole share of the same class or series of shares. |
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21A. |
(1) |
The
authorized capital, if any, of a company incorporated under this Act may be
stated in more than one currency in which case the par value of the shares,
if any, shall be expressed in the same currencies. |
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(2) |
The
Registrar may issue guidelines with respect to calculation of fees payable
pursuant to section 104 for companies with an authorized capital stated in a
currency other than United States dollars. |
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22. |
(1) |
Upon the
issue by a company incorporated under this Act of a share with par value,
the consideration in respect of the share constitutes capital to the extent
of the par value and the excess constitutes surplus. |
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(2) |
Subject to
any limitations in the Memorandum or Articles, upon the issue by a company
incorporated under this Act of a share without par value, the consideration
in respect of the share constitutes capital to the extent designated by the
directors and the excess constitutes surplus, except that the directors must
designate as capital an amount of the consideration that is at least equal
to the amount that the share is entitled to as a preference, if any, in the
assets of the company upon liquidation of the company. |
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(3) |
Upon the
disposition by a company incorporated under this Act of a treasury share,
the consideration in respect of the share is added to surplus. |
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23. |
(1) |
A share
issued as a dividend by a company incorporated under this Act shall be
treated for all purposes as having been issued for money equal to the
surplus that is transferred to capital upon the issue of the share. |
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(2) |
In the
case of a dividend of authorized but unissued shares with par value, an
amount equal to the aggregate par value of the shares shall be transferred
from surplus to capital at the time of the distribution. |
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(3) |
In the
case of a dividend of authorized but unissued shares without par value, the
amount designated by the directors shall be transferred from surplus to
capital at the time of the distribution, except that the directors must
designate as capital an amount that is at least equal to the amount that the
shares are entitled to as a preference, if any, in the assets of the company
upon liquidation of the company. |
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(4) |
A division
of the issued and outstanding shares of a class or series of shares into a
larger number of shares of the same class or series having a proportionately
smaller par value does not constitute a dividend of shares. |
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24. |
(1) |
Subject to
any limitations or provisions to the contrary in its Memorandum or Articles,
a company incorporated under this Act may amend its Memorandum to increase
or reduce its authorized capital, and in connection therewith, the company
may |
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(a) |
increase
or reduce the number of shares which the company may issue; |
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(b) |
increase
or reduce the par value of any of its shares; or |
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(c) |
effect any
combination under paragraph (a) and (b). |
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(2) |
Where a
company reduces its authorized capital under subsection (1), then, for
purposes of computing the capital of the company, any capital that
immediately before the reduction was represented by shares but immediately
following the reduction is no longer represented by shares shall be deemed
to be capital transferred from surplus to capital. |
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(3) |
A company
shall, in writing, inform the Registrar of any increase or decrease of its
authorized capital.
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25. |
(1) |
A company
incorporated under this Act may amend its Memorandum |
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(a) |
to divide
the shares, including issued shares, of a class or series into a larger
number of shares of the same class or series; or |
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(b) |
to combine
the shares, including issued shares, of a class or series into a smaller
number of shares of the same class or series. |
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(2) |
Where
shares are divided or combined under subsection (1), the aggregate par value
of the new shares must be equal to the aggregate par value of the original
shares. |
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26. |
Shares of
a company incorporated under this Act are personal property and are not of
the nature of real property. |
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27. |
(1) |
A company
incorporated under this Act must state in its Articles whether or not
certificates in respect of its shares shall be issued. |
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(2) |
If a
company incorporated under this Act issues certificates in respect of its
shares, the certificates |
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(a) |
must be
signed by two directors or two officers of the company, or by one director
and one officer; or |
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(b) |
must be
under the common seal of the company, with or without the signature of any
director or officer of the company; |
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and the
Articles may provide for the signatures or common seal to be facsimiles. |
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(3) |
A
certificate issued in accordance with subsection (2) specifying a share held
by a member of the company is prima facie evidence of the title of the
member to the share specified therein. |
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28. |
(1) |
A company
incorporated under this Act shall cause to be kept one or more registers to
be known as share registers containing |
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(a) |
the names
and addresses of the persons who hold registered shares in the company; |
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(b) |
the number
of each class and series of registered shares held by each person; |
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(c) |
the date
on which the name of each person was entered in the share register; |
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(d) |
the date
on which any person ceased to be a member; |
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(e) |
in the
case of bearer shares, the total number of each class and series of bearer
shares; and |
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(f) |
with
respect to each certificate for bearer shares, |
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(i) |
the
identifying number of the certificate; |
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(ii) |
the number
of each class or series of bearer shares specified therein; |
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(iii) |
the date
of issue of the certificate; and |
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(iv) |
the name
and address of the custodian of the certificate; |
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but the
company may delete from the register information relating to persons who are
no longer members or information relating to bearer shares that have been
cancelled. |
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(2) |
The share
register may be in any such form as the directors may approve but if it is
in magnetic, electronic or other data storage form, the company must be able
to produce legible evidence of its contents. |
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(3) |
Repealed
by No. 3 of 1988. |
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(4) |
A copy of
the share register, commencing from the date of the registration of the
company, shall be kept at the registered office of the company referred to
in section 38. |
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(5) |
The share
register is prima facie evidence of any matters directed or authorized by
this Act to be contained therein. |
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(6) |
A company
that wilfully contravenes this section is liable to a penalty of $25 for
each day or part thereof during which the contravention continues, and a
director who knowingly permits the contravention is liable to a like
penalty. |
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29. |
(1) |
If |
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(a) |
information that is required to be entered in the share register under
section 28 is omitted therefrom or inaccurately entered therein; or |
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(b) |
there is
unreasonable delay in entering the information in the share register, |
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a member
of the company, or any person who is aggrieved by the omission, inaccuracy
or delay, may apply to the court for an order that the share register be
rectified, and the court for may either grant of refuse the application,
with or without costs to be paid by the applicant, or order the
rectification of the share register, and may direct the company to pay all
costs of the application and any damages the applicant may have sustained. |
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(2) |
The court
may, in any proceedings under subsection (1), determine any question
relating to the right of a person who is a party to the proceedings to have
his name entered in or omitted from the share register, whether the question
arises between |
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(a) |
two or
more members or alleged members; or |
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(b) |
between
members or alleged members and the company; |
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and
generally the court may in the proceedings determine any question that may
be necessary or expedient to be determined for the rectification of the
share register. |
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30. |
(1) |
Subject to
any limitations in the Memorandum or Articles, registered shares of a
company incorporated under this Act may be transferred by a written
instrument of transfer signed by the transferor and containing the name and
address of the transferee. |
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(2) |
In the
absence of a written instrument of transfer mentioned in subsection (1), the
directors may accept such evidence of a transfer of shares as they consider
appropriate. |
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(3) |
A company
shall not be required to treat a transferee of a registered share in the
company as a member until the transferee's name has been entered in the
share register. |
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(4) |
Subject to
any limitation or provisions to the contrary in its Memorandum or Articles,
a company incorporated under this Act must, on the application of the
transferor or transferee of a registered share in the company, enter in its
share register the name of the transferee of the share. |
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(5) |
A transfer
of registered shares of a deceased, incompetent or bankrupt member of a
company incorporated under this Act made by his personal representative,
guardian or trustee, as the case may be, or a transfer of registered shares
owned by a person as a result of a transfer from a member by operation of
law, is of the same validity as if the personal representative, guardian,
trustee or transferee had been the registered holder of the shares at the
time of the execution of the instrument of transfer. |
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(6) |
For the
purposes of subsection (5), what amounts to incompetence on the part of a
person is a matter to be determined by the court after having regard to all
the relevant evidence and the circumstances of the case. |
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31. |
Subject to
part IIIA, a bearer share is transferable by delivery of a certificate
relating to the share. |
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32. |
(1) |
Where a
governmental authority, whether it is legally constituted or not, in any
jurisdiction outside the British Virgin Islands |
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(a) |
by or in
connection with a nationalization, expropriation, confiscation, coercion,
force or duress, or similar action; or |
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(b) |
by or in
connection with the imposition of any confiscatory tax, assessment or other
governmental charge, |
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takes or
seizes any shares or other interest in a company incorporated under this
Act, the company itself or a person holding shares or any other interest in
the company, including an interest as a creditor, may apply to the court for
an order that the company disregard the taking or seizure and continue to
treat the person who would have held shares or any other interest in the
company but for the taking or seizure of the shares or other interest as
continuing to hold the shares or other interest. |
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(2) |
Without
affecting subsection (1), where a person whose shares or other interests
have been taken or seized as referred to in subsection (1) is other than a
natural person, the person making the application under subsection (1), or
the company itself, may apply to the court for an additional order for the
company to treat the persons believed by the company to have held the direct
or indirect beneficial interest in the shares or other interest in the
company as the holder of those shares or other interest. |
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(3) |
The court
may, upon application made to it under subsection (1) or (2), |
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(a) |
grant such
relief as it considers equitable and proper; and |
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(b) |
order that
any shares of or other interest in the company vest in such trustees as the
court may appoint upon such trusts and for such purposes as the court
determines.
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33. |
(1) |
Subject to
any limitations or provisions to the contrary in its Memorandum or Articles,
a company incorporated under this Act may purchase, redeem or otherwise
acquire and hold its own shares but only out of surplus or in exchange for
newly issued shares of equal value. |
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(1A) |
Subject to
subsection (1), a company incorporated under this Act may not purchase,
redeem or otherwise acquire its own shares without the consent of the member
whose shares are to be purchased, redeemed or otherwise acquired, unless the
company is permitted to purchase, redeem or otherwise acquire the shares
without that consent by virtue of |
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(a) |
the
provisions of the Memorandum or Articles of the company; |
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(b) |
the
designations, powers, preferences, rights, qualifications, limitations and
restrictions with which the shares were issued; or |
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(c) |
the
subscription agreement for the issue of the shares. |
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(2) |
No
purchase, redemption or other acquisition permitted under subsection (1)
shall be made unless the directors determine that immediately after the
purchase, redemption or other acquisition |
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(a) |
the
company will be able to satisfy its liabilities as they become due in the
ordinary course of its business; and |
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(b) |
the
realizable value of the assets of the company will not be less than the sum
of its total liabilities, other than deferred taxes, as shown in the books
of account, and its capital; |
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and, in
the absence of fraud, the decision of the directors as to the realizable
value of the assets of the company is conclusive, unless a question of law
is involved. |
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(3) |
A
determination by the directors under subsection (2) is not required where
shares are purchased, redeemed or otherwise acquired |
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(a) |
pursuant
to a right of a member to have his shares redeemed or to have his shares
exchanged for money or other property of the company; |
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(b) |
by virtue
of a transfer of capital pursuant to paragraph (b) (iii) of section 35 (1); |
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(c) |
by virtue
of the provisions of section 83; and |
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(d) |
pursuant
to an order of the court. |
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(4) |
Subject to
any limitations in the Memorandum or Articles, shares that a company
purchases, redeems or otherwise acquires may be cancelled or held as
treasury shares unless the shares are purchased, redeemed or otherwise
acquired by virtue of a reduction in capital in a manner that would be a
contravention of the requirements of section 35 (3), in which case they
shall be cancelled but they shall be available for reissue; and upon the
cancellation of a share, the amount included as capital of the company with
respect to that share shall be deducted from the capital of the company. |
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(5) |
A company
incorporated under this Act may purchase, redeem or otherwise acquire the
shares of the company at a price lower than fair value if permitted by, and
then only in accordance with, the terms of |
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(a) |
its
Memorandum or Articles; or |
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(b) |
a written
agreement for the subscription for the shares to be purchased, redeemed or
otherwise acquired. |
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34. |
Where
shares in a company incorporated under this Act |
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(a) |
are held
by the company as treasury shares; or |
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(b) |
are held
by another company of which the first company holds, directly or indirectly,
shares having more than 50 per cent of the votes in the election of
directors of the other company, |
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the shares
of the first company are not entitled to vote or to have dividends paid
thereon and shall not be treated as outstanding for any purpose under this
Act except for purposes of determining the capital of the first company. |
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35. |
(1) |
Subject to
any limitation in the Memorandum or Articles and subject to subsections (3)
and (4), the capital of a company incorporated under this Act may, by a
resolution of members or by a resolution of directors, be |
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(a) |
increased
by transferring an amount out of the surplus of the company to capital; or |
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(b) |
reduced by
transferring an amount out of capital of the company to surplus. |
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(2) |
Repealed
by No. 3 of 1988. |
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(3) |
No
reduction of capital shall be effected that reduces the capital of the
company to an amount that is less than the sum of |
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(a) |
the
aggregate par value of |
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(i) |
all
outstanding shares with par value, and |
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(ii) |
all shares
with par value held by the company as treasury shares; and |
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(b) |
the
aggregate of the amounts designated as capital of |
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(i) |
all
outstanding shares without par value, and |
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(ii) |
all shares
without par value held by the company as treasury shares that are entitled
to a preference, if any, in the assets of the company upon liquidation of
the company. |
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(4) |
No
reduction of capital shall be effected under subsection (1) unless the
directors determine that immediately after the reduction |
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(a) |
the
company will be able to satisfy its liabilities as they become due in the
ordinary course of its business; and |
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(b) |
the
realizable value of the assets of the company will not be less than its
total liabilities, other than deferred taxes, as shown in the books of
account, and its remaining capital; |
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and, in
the absence of fraud, the decision of the directors as to the realizable
value of the assets of the company is conclusive, unless a question of law
is involved.
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36. |
(1) |
Subject to
any limitations or provisions to the contrary in its Memorandum or Articles,
a company incorporated under this Act may, by a resolution of directors,
declare and pay dividends in money, shares or other property. |
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(2) |
Dividends
shall only be declared and paid out of surplus. |
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(3) |
No
dividend shall be declared and paid unless the directors determine that
immediately after the payment of the dividend |
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(a) |
the
company will be able to satisfy its liabilities as they become due in the
ordinary course of its business; and |
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(b) |
the
realizable value of the assets of the company will not be less than the sum
of its total liabilities, other than deferred taxes, as shown in the books
of account, and its capital; |
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and, in
the absence of fraud, the decision of the directors as to the realizable
value of the assets of the company is conclusive, unless a question of law
is involved. |
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37. |
Subject to
any limitations or provisions to the contrary in its Memorandum or Articles,
a company incorporated under this Act may, by a resolution of directors,
include in the computation of surplus for any purpose under this Act the net
unrealized appreciation of the assets of the company, and, in the absence of
fraud, the decision of the directors as to the value of the assets is
conclusive, unless a question of law is involved. |
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37A. |
(1) |
A mortgage
or charge of shares of a company incorporated under this Act must be in
writing signed by, or with the authority of, the holder of the bearer share
or the registered holder of the registered share to which the mortgage or
charge relates. |
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(2) |
A mortgage
or charge of a bearer share is no valid and enforceable unless the
certificate for the share is deposited with a custodian. |
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(3) |
A mortgage
or charge of shares of a company incorporated under this Act need not be in
any specific form but it must clearly indicate |
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(a) |
the
intention to create a mortgage or charge; and |
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(b) |
the amount
secured by the mortgage or charge or how that amount is to be calculated. |
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(4) |
A mortgage
or charge of shares of a company incorporated under this Act may be governed
by the law of a jurisdiction other than the British Virgin Islands, but if a
law other than the law of the British Virgin Islands is specified as the
governing law |
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(a) |
the
mortgage or charge must be in compliance with the requirements of its
governing law in order for the mortgage or charge to be valid and binding on
the company; and |
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(b) |
the
remedies available to a mortgagee or chargee shall be governed by the
governing law and the instrument creating the mortgage or charge save that
the rights between the mortgagor or mortgagee as a member of the company and
the company shall continue to be governed by the Memorandum and the Articles
of the company and this Act. |
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(5) |
If no law
is specified to govern a mortgage or charge of shares of a company
incorporated under this Act, the instrument creating the mortgage or charge
shall be governed by the laws of the British Virgin Islands and, in the case
of a default by the mortgagor or chargor on the terms of the mortgage, the
mortgagee or chargee is entitled to the following remedies: |
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(a) |
subject to
any limitations or provisions to the contrary in the instrument creating the
mortgage or charge, the right to sell the shares; and |
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(b) |
the right
to appoint a receiver who, subject to any limitations or provisions to the
contrary in the instrument creating the mortgage or charge, may |
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(i) |
vote the
shares, |
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(ii) |
receive
dividends and other payments in respect of the shares, and |
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(iii) |
exercise
other rights and powers of the mortgagor or chargor in respect of the
shares, |
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until such
time as the mortgage or charge is discharged. |
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(6) |
Subsection
(5) also applies to a mortgage or charge of shares of a company incorporated
under this Act where the law of the British Virgin Islands is specified as
the governing law. |
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(7) |
Subject to
any provisions to the contrary in the instrument of mortgage or charge of
shares of a company incorporated under this Act, all amounts that accrue
from the enforcement of the mortgage or charge shall be applied in the
following manner: |
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(a0 |
firstly,
in meeting the costs incurred in enforcing the mortgage or charge; |
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(b) |
secondly,
in discharging the sums secured by the mortgage or charge; and |
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(c) |
thirdly,
in paying any balance due to the mortgagor or chargor. |
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(8) |
The
remedies referred to in subsection (5) are not exercisable until |
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(a) |
a default
has occurred and has continued for a period of not less than 30 days, or
such shorter period as many be specified in the instrument creating the
mortgage or charge; and |
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(b) |
the
default has not been rectified within 14 days from service of the notice
specifying the default and requiring rectification thereof. |
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(9) |
In the
case of the mortgage or charge of registered shares there may be entered in
the share register of the company |
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(a) |
a
statement that the shares are mortgaged or charged; |
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(b) |
the name
of the mortgagee or chargee; and |
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(c) |
the date
on which the statement and name are entered in the share register. |
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(10) |
The
Governor in Council may, on the advice of the Commission, make regulations
providing for such transitional provisions as he considers necessary or
expedient to have effect in relation to this section consequent upon the
coming into operation of Part IIIA and the repeal and substitution of
subsection (2) by the International Business Companies (Amendment) Act,
2003.
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