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Zimbabwe: Afre to Create Capital Redemption Fund
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Financial Gazette (Harare)
8 May 2008
Posted to the web 9 May 2008
Staff Reporter
Harare
AFRICA First ReNaissance Corporation Limited (Afre) is seeking shareholder approval for the creation of a capital redemption reserve fund, to be appropriated out of revenue reserves.
A capital redemption reserve is a reserve fund created by a company when shares are redeemed out of retained profits and not out of a new issue of share capital.
The reserve is created by making a transfer out of the profit and loss account to a specially designated account, which becomes the capital redemption reserve fund.
Amounts held in this account cannot be distributed to shareholders by way of dividend, although they may be used to make bonus issues of share capital. The purpose of the reserve is to ensure that the company's capital is not diluted by the redemption of some of the shares.
In a notice to shareholders, Afre's board, headed by astute dealmaker Patterson Timba, said the capital redemption fund would be created in accordance with the provisions of the Companies Act.
The creation of the reserve fund is part of a resolution before shareholders for the purchase of the company's own shares under a share buy back arrangement.
A statement to shareholders said the acquisition of the ordinary shares would be such that the aggregate purchase in any financial year would not exceed 10 percent of the company's issued share capital.
"The price shall not be lower than the nominal value of company's shares and not greater than 20 percent above the weighted average traded price for such ordinary shares over five business days immediately preceding the date of purchase of such ordinary shares by the company," read part of the notice.
Afre shareholders will convene for an annual general meeting to decide on the resolution on May 29, 2008.
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The Afre directors are also seeking a special resolution at the same meeting for the amendment of the company's articles of association.
They want to be empowered to be able to borrow, or secure, at their discretion, the payment of any sum of money for the purposes of the company.
Afre, was until recently known as First Mutual Limited, and has subsidiary operations in life assurance, property and actuarial services, among others.
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