353Capital redemption reserve

353 Capital redemption reserve

(1) This section applies if CCUs are redeemed out of profits.

(2) Out of profits there is to be transferred to a reserve called the capital redemption reserve a sum equal to the nominal amount of the CCUs redeemed.

(3) Subject to subsection (5), the provisions of this Law relating to the reduction of share capital of a co-operative apply as if the capital redemption reserve were paid up share capital of the co-operative.

(4) Subject to subsection (5), the capital redemption reserve may be applied in paying up unissued shares of the co-operative to be issued to members of the co-operative as fully paid bonus shares.

(5) Subsections (3) and (4) do not apply to a non-distributing co-operative.

Note. Section 448 provides that, on a winding up of a non-distributing co-operative, the surplus property of the co-operative must be distributed as required by the rules of the co-operative.