BLP Buyback Flashcards
What are the 3 ways a company can fund a buyback of shares?
Distributable profits, proceeds of fresh issue of shares for purpose of financing buyback, capital
Who can buyback capital?
Only private companies
When can a company buyback shares out of profits/proceeds of a fresh issue?
Not restricted in Articles
Shares are fully paid up
Company must have continued to issue shares other than redeemable or treasury shares
Requirements for buyback out of profits/proceeds of a fresh issue?
Contract, needs to be approved by OR
Available for inspection for 15 days before GM (or circulate contract if by WR)
What should take place X months before statement of solvency?
No earlier than 3 months before statement of solvency, prepare accounts to ascertain available profits
What buyback of capital, what also must be approved?
Auditors report
What resolutions need to be passed for buyback out of capital?
OR to approve contract
SR to approve payment out of capital
When should buyback out of capital take place?
Only if there are no distributable profits available
Is a contract required for redeemable shares?
NO
With buyback of shares, who cannot vote on the resolution? What effect does this have on total shares held by shareholders voting?
The shareholder who is having their shares bought
The shares won’t be counted (e.g. if there are 4 shareholders each holding 25 shares, then it will be out 75 shares for those 3 that are allowed to vote).
