Share buybacks

Question 1

Which section of CA 2006 requires that a company’s articles must not restrict the power of the company to issue redeemable shares?

Answer 1

s684(2)

Question 2

Which section of CA 2006 says that the terms, manner and condition of redemption must be determined before the redeemable shares are allotted?

Answer 2

s685(3)(a)

Question 3

Which section of CA 2006 says that, to be redeemed, redeemable shares need to be fully paid up?

Answer 3

s686(1)

Question 4

Which section of CA 2006 says that redeemable shares may be redeemed out of distributable profits or proceeds from a fresh issue of shares?

Answer 4

s687(2)(a) + (b)

Question 5

Which section of CA 2006 says that redeemable shares may be redeemed out of capital in accordance with the rules of Chapter 5?

Answer 5

s687(1)

Question 6

Which section of CA 2006 says that redeemed shares are cancelled and the company’s share capital is diminished accordingly?

Answer 6

s688

Question 7

(1) Which section of CA 2006 says that when shares are redeemed, the company must send notice to the registrar along with a statement of capital, and (2) when must the company do this by?

Answer 7

s689(1) and (2). The company needs to do this within 1 month of the shares being redeemed.

Question 8

Which section of CA 2006 says that a company may purchase its own shares subject to any restriction in the company’s articles?

Answer 8

s690(1)(b)

Question 9

Which section of CA 2006 says that a company may purchase its own shares out of capital in accordance with the requirements of Chapter 5?

Answer 9

s691(1)

Question 10

(1) Which section of CA 2006 provides for the de minimis procedure and (2) what is the maximum value to use this procedure?

Answer 10

s691(1ZA). The maximum value of the transaction is either (a) 15,000 or (b) the nominal value of 5% of the company’s fully paid up share capital - whichever is LOWER.

Question 11

Which section of CA 2006 says that a company may purchase its own shares out of distributable profits or proceeds from a fresh issue of shares?

Answer 11

s691(2)(a) + (b)

Question 12

Which section of CA 2006 states that a contract for the purchase of a company’s own shares must be either: an ordinary resolution, or prepared conditionally on approval by ordinary resolution?

Answer 12

s694(2)(a) + (b)

Question 13

Which section of CA 2006 says that when approving a contract for purchase of a company’s own shares by ordinary resolution, using the written resolution procedure, the member to which the shares being purchased relate is not eligible to vote?

Answer 13

s695(2)

Question 14

Which section of CA 2006 says that when approving a contract for purchase of a company’s own shares by ordinary resolution, at a MEETING, the member to which the shares being purchased relate is eligible to vote, but must not carry the vote?

Answer 14

s695(3)

Question 15

Which section of CA 2006 says that where a company is making a purchase of its own shares, and the contract requires approval by ordinary resolution, a copy of the contract needs to be sent out to each eligible member with the resolution (when using the written resolution procedure)?

Answer 15

s696(2)(a)

Question 16

Which section of CA 2006 says that where a company is making a purchase of its own shares, and the contract requires approval by ordinary resolution, a copy of the contract needs to be made available for inspection at the company’s registered office for 15 days ending with the day of the meeting, and at the meeting itself?

Answer 16

s696(2)(b)

Question 17

(1) Which section of CA 2006 states that a copy of the contract needs to be made available for inspection at the company’s registered office for a period of 10 years and (2) on what date does the period of 10 years run from?

Answer 17

s702(3) either from (a) the date on which the purchase of the shares is completed, or (b) the date on which the contract otherwise deems

Question 18

Which section of CA 2006 states that where a company purchases its own shares, the shares are treated as cancelled and the company’s share capital is diminished accordingly?

Answer 18

s706(b)(i) and (ii)

Question 19

(1) Which section of CA 2006 states that where a company purchases its own shares it must deliver a return to the registrar and (2) when must the company do this by?

Answer 19

s707(1) must do so within 28 days following receipt of the shares

Question 20

(1) Which section of CA 2006 states that where a company purchases its own shares it must give notice to the registrar that the shares have been cancelled accompanied by a statement of capital and (2) when must the company do this by?

Answer 20

s708(1) and (2) - must do so within 28 days following receipt of the shares (s708(1))

Question 21

Which section states that, for a company to make a purchase/redemption out of capital, distributable profits and any proceeds from a fresh issue of shares for that purpose need to be used up first?

Answer 21

s710(1)(a) + (b)

Question 22

(1) Which section of CA 2006 sets out the 4 broad requirements for a payment out of capital and (2) what are they?

Answer 22

s713. The requirements are:
- making of directors’ solvency statement and auditors’ report
- approval by special resolution
- public notice of the proposed payment
- directors’ statement and auditors’ report available for inspection

Question 23

Which section of CA 2006 governs the requirements for the directors’ solvency statement?

Answer 23

s714

Question 24

Which section of CA 2006 states that a payment out of capital must be approved by special resolution?

Answer 24

s716(1)

Question 25

Which section of CA 2006 states that the special resolution must be passed on, or within the week immediately following, the date on which the directors gave their solvency statement?

Answer 25

s716(2)

Question 26

Which section of CA 2006 states that where a company is using a written resolution procedure to pass a SR to approve the payment out of capital, the member to which the shares relate is not an eligible member for voting purposes?

Answer 26

s717(2)

Question 27

Which section of CA 2006 states that where the company holds a GM to pass the SR approving the payment out of capital, the member to which the shares relate is eligible to vote, but must not carry the vote?

Answer 27

s717(3)

Question 28

Which section of CA 2006 states that where the company uses the written resolution procedure to pass the SR approving payment out of capital, a copy of the directors’ statement and auditors’ report must be sent out to each eligible member with the resolution?

Answer 28

s718(2)(a)

Question 29

Which section of CA 2006 states that where the company is holding a GM to pass the SR approving payment out of capital, the directors’ statement and auditors’ report must be available for inspection at the GM?

Answer 29

s718(2)(b)

Question 30

Which section of CA 2006 deals with the public notice of the proposed payment and its requirement?

Answer 30

s719

Question 31

(1) which section of CA 2006 states that the directors’ statement and auditors’ report need to be kept available for a period of 5 weeks beginning on the date the public notice under s719(1) was given and (2) where do they need to be kept available for inspection?

Answer 31

s720(1)(a) + (b) - at the company’s registered office s720(2)(a)

Question 32

Which section of CA 2006 says that any member or creditor of the company may apply to the court to challenge the resolution?

Answer 32

s721(1)

Question 33

If a creditor/member wants to make an application under s721(1) when must they do this by?

Answer 33

within 5 weeks of the passing of the resolution (s721(2)(a))

Question 34

Which section says that the payment out of capital may be made no earlier than 5 weeks since the passing of the resolution but no later than 7 weeks?

Answer 34

723(1)(a) + (b)