Section 67: Reduction of shareholder liability treated as distribution

67. Reduction of shareholder liability treated as distribution (1) Where a company— (a) alters its constitution; (b) acquires shares issued by it; or (c) redeems shares under section 78, in a manner which would cancel or reduce the liability of a shareholder to the company in relation to a share held prior to that alteration, acquisition or redemption, the cancellation on reduction of liability shall be treated for the purposes of section 61 as if it were a distribution and for the purposes of section 63 (2) as if it were a dividend. (2) Where a company has altered its constitution, acquired shares or redeemed shares under Sub-Part E in a manner which cancels or reduces the liability of a shareholder to the company in relation to a share held prior to that alteration, acquisition or redemption, that cancellation or reduction of liability shall be treated for the purposes of section 62 as a distribution of the amount by which that liability was reduced. (3) Where the liability of a shareholder of an amalgamating company to that company in relation to a share held before the amalgamation is— (a) greater than the liability of that shareholder to the amalgamated company in relation to a share or shares into which that share is converted; or (b) cancelled by the cancellation of that share in the amalgamation, the reduction of liability effected by the amalgamation shall be treated for the purposes of section 66 (1) and (3) as a distribution by the amalgamated company to that shareholder, whether or not that shareholder becomes a shareholder of the amalgamated company of the amount by which that liability was reduced. C35 – 53 [Issue 1] Companies Act Sub-Part C – Acquisition and Redemption of Company’s own Shares