COMPANIES ACT - 1963 (ACT 179)

    Section - 56 - Prohibited Transactions in Shares

    (1) Except as hereinafter mentioned a company shall not,

    (a) alter the number of its shares or the amount remaining payable thereon;

    (b) release any shareholder or former shareholder from any liability on the shares;

    (c) provide any financial assistance, directly or indirectly, for the subscription or purchase of its shares or the shares of its holding company;

    (d) acquire, by way of purchase or otherwise, any of its issued shares or any shares of its holding company.

    (2) For the purposes of paragraph (d) of subsection (1) of this section shares shall be deemed to have been acquired by the company if they purport to be held on trust for the company notwithstanding that they are registered in the names of nominees.

    (3) Nothing in subsection (1) of this section shall prohibit a company from voluntarily acquiring its own shares on its conversion to a company limited by guarantee in accordance with section 11 of this Code.

    (4) In the event of any breach of this section,

    (a) if such breach is of paragraph (a) or (b) of subsection (1) of this section, the purported alteration or release shall be void and every officer of the company who is in default shall be liable to a fine not exceeding one hundred pounds;

    (b) if such breach is of paragraph (c) or (d) of subsection (1) of this section then,

    (i) the transaction concerned shall, except in favour of a bona fide purchaser or seller of shares without knowledge of the breach, be voidable by the company and any payment made by the company in respect thereof shall be immediately repayable with interest at the rate of five per centum per annum, or such higher rate as the Court may think fit to order,

    (ii) whether or not such transaction is avoided, every officer of the company who is in default shall be liable to a fine not exceeding one hundred pounds or twice the amount of any provision or payment made by the company in respect of such transaction, whichever is the greater.