We reported in our last newsletter on the publication of the revised draft of the Companies Act 2006 (Amendment of Part 18) Regulations 2013 on 19 March 2013 which implement certain changes to the share buyback regime. The changes include:
- lowering the threshold required for shareholder approval for a buyback by a private limited company to an ordinary resolution rather than a special resolution
- allowing private limited companies to buy back small numbers of shares (the lower of shares with a value of £15,000 or the equivalent of 5% share capital in any financial year) without having to specify that the cash is from distributable profits, where there is provision in the company's Articles of Association to do so (or by way of a special resolution if the Articles do not include the relevant provision)
if the buyback is connected to an employees' share scheme, allowing private limited companies to:
- pay for shares in instalments
- authorise in advance multiple share buyback contracts, and
- finance the buyback of shares out of capital, subject to approval by special resolution and the signing of a solvency statement, and
- allowing private limited companies and unlisted public companies to hold their shares in treasury.
The Regulations have now been finalised and published together with an Explanatory Memorandum and remain in the same form as the revised draft.