A revised draft of the Companies Act 2006 (Amendment of Part 18) Regulations 2013 has now been published, together with an explanatory memorandum, which revises the draft regulations issued with the original consultation in October in order to make the changes necessary to reflect the government's position in its February response (as summarised in our last newsletter). 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 multiple share buyback contracts in advance
- finance the buyback of shares out of capital, subject to approval by special resolution and the signing of a solvency statement
- allowing private limited companies and unlisted public companies to hold their shares in treasury.
The Regulations will come into force on 30 April 2013.