s 53 The capital redemption
(1) Where in pursuance of section 45 or 46 of this Act any shares of a company are redeemed or purchased wholly out of the profits of the company the amount by which the company’s issued share capital is diminished in accordance with subsection (8) of section 45 of this Act on cancellation of the shares redeemed or purchased shall be transferred to a reserve, to be called “ the capital redemption reserve ”. (2) Subject to subsection (6)(b) of section 54 of this Act, where in pursuance of either of those sections any shares of a company are redeemed or purchased wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds is less than the aggregate nominal value of the shares redeemed or purchased, the amount of the difference shall be transferred to the capital redemption reserve. (3) The provisions of the 1948 Act relating to the reduction of the share capital of a company shall apply as if the capital redemption reserve were paid up share capital of the company, except that the reserve may be applied by the company in paying up unissued shares of the company to be allotted to members of the company as fully paid bonus shares. C2 c. 62 Companies Act 1981