Section 430 CAMA 2020
Section 430 Companies and Allied Matters Act is about Reserve and capitalisation. It is under Chapter 16 (Annual returns) of the Act.
(1) The directors may, before recommending any dividend, setaside out of the profits of the company such sums as they think proper as areserve or reserves which shall, at the discretion of the directors, be applicablefor any purpose to which the profits of the company may be properly applied,and pending such application may, at the discretion, either be employed in thebusiness of the company or be invested in such investments (other than sharesof the company) as the directors think fit, and the directors may without placingthe same to reserve, carry forward any profits which they may think prudentnot to distribute.
(2) The company in general meeting may upon the recommendation of the directors resolve that it is desirable to capitalise any part of the amount,for the time being, standing to the credit of any of the company’s reserve accounts or to the credit of the profit and loss account or available for distribution.
(3) Such sum may be set free for distribution among the members who would have been entitled to dividends in the same proportions on condition that the same be not paid in cash but be applied either on or towards paying up any amount unpaid on any shares held by such members respectively or paying up in full unissued shares or debentures of the company to be allotted and distributed to creditors as fully paid up.
(4) The company may decide by a resolution, what part shall be distributed in cash or in shares and the directors shall give effect to such resolution.
(5) Share premium account and a capital redemption reserve fund may,for the purposes of this subsection, only be applied in the paying up of unissued shares to be issued to members of the company as fully paid bonus shares.
(6) Where a resolution under subsections (2)-(5) is passed, the directors shall make all appropriations and applications of the undivided profits resolved to be capitalised thereby, and all allotments and issues of fully-paid shares or debentures, if any, and generally do all acts and things required to give effect to it.
(7) The directors shall have power to make such provision by the issue of fractional certificates or by payment in cash or otherwise as they think fit inthe case of shares or debentures becoming distributable in fractions.
(8) Any person may be authorised by the directors to enter on behalf of all the members entitled under this section into an agreement with the company to provide for the allotment to them respectively, credited as fully paid up, of any further shares or debentures to which they may be entitled upon such capitalisation, or (as the case may require) for the payment by the company on their behalf, of the amount or any part of the amount remaining unpaid on their existing shares, and any agreement made under such authority is effective and binding on all such members
