Redemption/Buyback of Shares (SGSs 18,19)

Question 1

Check to see if Articles allow purchase of own shares

Answer 1

s.690(1)(b) CA 2006

Question 2

Check to see if shares are fully paid up

Answer 2

s.691(1)(a) CA 2006

Question 3

Check to see if Company will continue to have shares

Answer 3

s.690(2) CA 2006

Question 4

Company will need a purchase contract to purchase shares back

Answer 4

s.694(1) CA 2006

Question 5

Purchase contract will need to be approved by an OR

Answer 5

s.694(2) CA 2006

Question 6

Any director can call a BM

Answer 6

MA 9(1)

Question 7

Reasonable notice as is usual for the company is required for BM

Answer 7

Browne v La Trinidad

Question 8

Quorum for directors is 2

Answer 8

MA 11(2)

Question 9

Any directors need to disclose an interest in a transaction

Answer 9

s.177(1) CA 2006

Question 10

Manners in which notice of GM may be given

Answer 10

s.308 CA 2006

Question 11

Notice required to be given to SH for GM

Answer 11

s.310 CA 2006

Question 12

14 clear days notice required for GM

Answer 12

s.307(1) and s.360 CA 2006

Question 13

Short notice

Answer 13

s.307(5) CA 2006

Question 14

Purchase contract needs to be available to inspect at least 15 days before GM, including day of GM

Answer 14

s.696(2)(b) CA 2006

Question 15

Quorum for GM is 2

Answer 15

s.318(2) CA 2006

Question 16

Simple majority for ordinary resolution

Answer 16

s.282(1) CA 2006

Question 17

Vote at GM is by show of hands unless poll vote is demanded

Answer 17

MA 42

Question 18

Shareholders selling shares can vote provided that his vote does not carry the resolution. If poll vote is demanded, should only vote in respect of shares not being sold

Answer 18

s.695(3) CA 2006

Question 19

Directors with interest in a transaction not to vote on the matter in a BM

Answer 19

MA 14(1)

Question 20

Return to be sent to Companies House with notice of cancellation of shares and statement of capital within 28 days of purchase

Answer 20

s.707(1) and s708(1) and (2) CA 2006

Question 21

PMM - Cancel share certificate and reissue new share certificate

Answer 21

s.706 and s.776 CA 2006

Question 22

PMM - Need to keep a copy of the purchase contract at the registered office for 10 years from date of purchase

Answer 22

s.702(2) CA 2006

Question 23

Where redeemable shares are redeemed, they are treated as cancelled

Answer 23

s.688(a) CA 2006

Question 24

Notification to be sent to Companies House with statement of capital within one month

Answer 24

s.689(1) and (2) CA 2006

Question 25

Only limited companies can use capital for the purchase of shares

Answer 25

s.692(1) CA 2006

Question 26

Need to check there is no restriction on the use of capital to purchase own shares

Answer 26

s.709(1) CA 2006

Question 27

Shares can only be purchased/redeemed using capital after any distributable profits are used

Answer 27

s.710(1) CA 2006

Question 28

The accounts used to determine what profits/proceeds are available must not be more than 3 months older than the date of the director’s statement

Answer 28

s.712(6) and (7) CA 2006

Question 29

A special resolution of the members will also be required to approve payment of the purchase/redemption from capital

Answer 29

s.716(1) CA 2006

Question 30

A Directors' Statement of Solvency, along with an auditor's report no older than 3 months, will be required for share purchase by capital

Answer 30

s.714 CA 2006

Question 31

The SR to allow capital to be used needs to be within 7 days of the execution of the Directors' Statement

Answer 31

s.716(2) CA 2006

Question 32

Short Notice Procedure

Answer 32

s.307(4)-(6) CA 2006

Question 33

Majority of no less than 75% for a SR

Answer 33

s.283(1) CA 2006

Question 34

Company secretary to notify creditors of company’s approval of payment out of capital through a notice in the Gazette and in a national newspaper, or to give notice in writing to each of the company’s creditors

Answer 34

s.719(2) CA 2006

Question 35

Enter into the contract following the 5-week period after the passing of the special resolution in which creditors have an opportunity to object to the use of capital for the purchase

Answer 35

s.721(1) and (2) CA 2006

Question 36

Share purchase/redemption by capital needs to be made within 7 weeks of the SR being passed

Answer 36

s.723(1) CA 2006

Question 37

PMM - SR to be filed within 15 days of being passed

Answer 37

s.30(1) CA 2006

Question 38

Only private limited companies can use capital for the redemption of shares

Answer 38

s.687(1) CA 2006

Question 39

Need to check there is no restriction on the use of capital to redeem the shares

Answer 39

s.709(1) CA 2006

Question 40

Before redeeming shares, need to check that the company will continue to have other non-redeemable shares

Answer 40

s.684(4) CA 2006