Section 57 — Companies Act 1993: Reduction of shareholder liability a distribution

57 Reduction of shareholder liability a distribution (1) If a company proposes to alter its constitution, or to acquire shares issued by it, or redeem shares under section 69 of this Act, as the case may be, 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 proposed cancellation or reduction of liability is to be treated,— (a) For the purposes of section 52 of this Act, as if it were a distribution; and (b) For the purposes of subsections (2) and (3) of section 53 of this Act, as if it were a dividend. (2) If a company has altered its constitution, or acquired shares, or redeemed shares under section 69 of this Act, as the case may be, 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 is to be treated for the purposes of section 56 of this Act as a distribution of the amount by which that liability was reduced. (3) If 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 is to be treated for the purposes of section 56(1) and (5) of this Act 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.