BL - Shares - Buyback Flashcards
Buyback: What two methods allow a company to buy back its shares?
- Follow the procedure set out in CA 2006
- Following a court order for unfair prejudice
Buyback: What funds can a PUBLIC company use to buyback its own shares?
- Distributable profits;
- Proceeds of a fresh issue of shares made for the purpose of financing the buyback; or
Buyback distributable:
Public/Private companies: What conditions are there on a buyback out of distributable profits/fresh issue of shares?
- Purchase of own shares is not restricted in company’s articles, 📝
- The shares purchased are fully paid up💰
- Following the purchase, the comapny must continue to have ordinary shares 🎟️
Buyback distributable:
Public/Private companies: What is the procedure for a buyback out of distributable profits/fresh issue of shares?
- A contract is required.
- The terms of the contract need to be approved by ORDINARY resolution.
GM:
- available for inspection for 14 clear days before the GM and also at the GM.
WR:
- If a written resolution is used, a copy of the contract must be sent with a copy of the written resolution.
Buyback distributable:
Public/Private companies: What happens after the buyback out of distributable reserves or profits?
- File a return, notice of cancellation & statement of capital within 28 days.
- Keep a copy of the contract for 10 years
- Cancel shares, update register of members
Buyback Capital:
What conditions are there on a buyback out of capital?
In addition to the conditions for a buyback out of profits/new issue:
- Check no distributable reserves (if so use first) 🏦
- The purchase is not restricted in the articles, 📝
. - Account prepared no more than 3 months before the director’s statement. 📊
- A director’s statement of solvency must be prepared together with an auditors’ report, 🎩🤓
. - A SPECIAL resolution must be passed within a week of the directors’ signing the written statement of solvency. 💫
Buyback Capital: What does a director’s statement of solvency confirm for a buyback out of capital?
- The company is solvent and will be for 12 months after the buyback.
Buyback Capital: What does the auditors’ report state for a buyback out of capital?
- The auditors are not aware of anything to indicate that the director’s opinion is not reasonable.
Note: a copy of the auditors’ report and directors’ statement must be made available to members.
Buyback Capital: What are the notification requirements after passing the special resolution to make a payment out of capital?
- Publish a notice in the Gazette
AND - Publish a notice in the same form as the Gazette in a national newspaper OR give notice to each creditor.
AND - Filing copies of the director’s statement and auditors’ report at Companies House.
Buyback Capital: What are the requirements of a notice published in the Gazzette?
a) company has approved its POS
b) where directors’ statement and auditors’ report are available for inspection; and
c) that any creditor of the company, may, at any time within 5 weeks immediately following the date of the resolution, apply to court under s.721 CA 2006 for an order preventing payment.
Buyback Capital: When can a purchase out of capital occur after the special resolution?
No earlier than 5 weeks and no later than 7 weeks after the date of the special resolution.
Buyback Capital: What needs to happen after the buyback of shares out of capital and when?
Within 28 days of the date on which the shares that are bought back are delivered to the comapny, the company must send to companies house:
- A notice of cancellation
- A statement of capital
Then:
- Cancel Shares and update Register
- Keep contract for 10 years
Buyback Capital: What is the process for a buyback out of capital by board meeting?
- accounts in last 3 months 📊
- 14 days notice of contract (unless WR) 🪧
- Directors statement of Solvency & Auditors report made available no more than 7 days before BM 🎩🤓
- SH approve contract with Ordinary Resolution ⭐️
- SH approve payment out of capital by Special Resolution 💫
- Notifications within 7 days of SR - (Gazette, Newspaper/Notice to creditors & Coy house) 📰🏦⛪️
- SR filed at coy house within 15 days
💫⛪️ - Payment of capital 5 - 7 weeks after SR 💰
- Return sent to Coy House w/in 28 days of purchase of shares 📝⛪️
Buyback Capital: What are the notification requirements after passing the special resolution to make a payment out of capital?
from date of SR:
- 7 days place notices in gazette and file Directors Solvency Statement & Auditors report at Companies House
- 15 days - file SR at Companies House
Buyback Capital: Which companies can buy their own shares using capital?
Private companies only
