A revised draft of the Companies Act 2006 (Amendment of Part 18) Regulations 2013 has now been published, which is intended to come into force on 30 April 2013.
These regulations have arisen following the BIS consultation on the implementation of the Nuttall Review. This purpose of the Nuttall Review was to make recommendations to the government to help improve the take up of employee ownership structures. The Review concluded, amongst other things, that the existing company law provisions on buyback of shares were overly burdensome and could discourage employee ownership structures. Following the Review the government pledged to implement the recommendations contained in the Review.
The regulations will make the following changes to Part 18 of the Companies Act 2006 in respect of share buybacks:
- Authority for off-market share buybacks will be possible by ordinary resolution (instead of the special resolution as previously).
- Private companies will be allowed to buy back shares using small amounts of cash (not exceeding the lower of £15,000 or 5% of share capital in any financial year) that does not have to be identified as distributable reserves, where authorised to do so by its articles.
- There will be the ability to authorise in advance multiple off-market share buyback contracts to private companies, where the buyback is connected with an employees' share scheme.
- Private companies will be allowed to finance buybacks (in connection with an employees' share scheme) out of capital, subject to the signing of a solvency statement and special resolution and provided that the payment out of capital is made no earlier than 5 weeks and no later than 7 weeks after the relevant shares are surrendered.
- Private companies will be able to pay for the shares in instalments (where the buyback is in connection with an employees' share scheme).
- Private companies and unlisted public companies will be able to hold the shares subject to the buyback in treasury.
The draft regulations can be viewed here: