Part 23 is largely a restatement of Part 8, so for the most part business will see little change in the effect of the new Part 23 from the effect of 'old' Part 8 under the Companies Act 1985.
Sections 845, 846 and 851 of the 2006 Act are new. Sections 845 and 846 deal with the transfer of non-cash assets and the way in which they are to be valued for the purpose of the distributions rules. Section 845 clarifies the situation where a company with distributable profits transfers a non-cash asset to a member. This is a distribution, and the new provisions make clear that the amount of the distribution is calculated by reference to the book value of the asset. If the asset is transferred for less than its book value, the shortfall will need to be covered by distributable profits in order to comply with the distribution rules.
Section 846 applies where a company has re-valued a non-cash asset and this has resulted in an unrealised profit. Where a company transfers such an asset to a member, section 846 permits the profit to be treated as a realised profit for the purpose of the distribution rules.
Section 851 preserves existing common law rules on unlawful distributions but provides that these rules do not apply to distributions of non-cash assets. Such distributions are governed by the statutory provisions only.
Part 23 will be in force before some companies have produced accounts under the 2006 Act for the first financial year beginning on or after 1 April 2008. It will be possible for such companies to justify a distribution by reference to their most recent accounts prepared under the 1985 Act.