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Company Law Bill [HL]

moved Amendment No. A77:"Page 273, line 42, at end insert—" ““(4A)   In subsection (3)(a) for ““dividend lawfully made”” substitute ““distribution lawfully made under Part VIII””.”” The noble Lord said: Amendment No. A77 still deals with circumstances in which financial assistance is not prohibitive. The amendment seeks to insert a new subsection after subsection (4) at the bottom of page 273. This is another issue raised with us by the Institute of Chartered Accountants in England and Wales. Section 153(3)(a) of the Companies Act 1985 states that a dividend lawfully made is not prohibited financial assistance. Forms of lawful distribution, under Part VIII of the 1985 Act, are wider than dividends, as evidenced by the proposed introduction of new Section 275A, ““Distribution in kind arising on disposition of non-cash asset at an undervalue: determination of amount””, inserted by Clause 577, ““Distributions in kind””. The amendment would be of much benefit in simplifying group reconstructions, including those preparatory to the sales of parts of groups, by permitting under financial assistance law transactions that more general distributions law rightly recognises as including no mischief. I beg to move.