Georgia Haller spoke at our General Counsel Know-How series on Share buybacks.
Read some quick takeaways from the session below and you can watch the full recording of the session here.
Reasons for Share Buybacks
Share buybacks are undertaken for various reasons, including returning surplus cash to shareholders, facilitating the exit of a shareholder, handling shares from employee share schemes, and increasing metrics like the earnings per share or gearing ratio.
Methods of Financing Buybacks
Companies can finance share buybacks through distributable profits, proceeds from new share issues, capital under Chapter 5 of the Companies Act 2006, or using the de minimis exemption. Each method comes with specific requirements and restrictions.
Legal and Procedural Considerations
Share buybacks must comply with provisions in the company’s articles of association and the Companies Act 2006, including shareholder approvals, sufficient distributable profits, and payment requirements. Non-compliance may render the buyback void and lead to legal liabilities.
Post-Completion Requirements
After completing a share buyback, companies must ensure proper documentation, including filings with HMRC and Companies House, updating the register of members, and ensuring that repurchased shares are either cancelled or held in treasury, as applicable.
Rectifying Issues with Void Buybacks
If a buyback is void, companies may need to rectify through actions like cancelling the shares via capital reduction or re-executing the buyback. Proper legal steps, including deeds of release and accounting adjustments, are critical to mitigate risks and comply with regulations.
About Ignition Law’s General Counsel Know-How series
Ignition Law’s General Counsel Know-How webinar series delivers technical legal insights designed to make a real impact. Originally created to upskill our team, we found these sessions would provide valuable guidance for in-house counsel, seasoned entrepreneurs, and business leaders too—so we now ask our clients and network to join as well. Focused, practical, and technical, these webinars help you navigate legal challenges and stay ahead.
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