Buying back shares into treasury
Buying back shares into treasury

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Buying back shares into treasury
  • Buying back shares into treasury—procedure
  • When can shares be bought back into treasury?
  • Why buy back shares into treasury?
  • Buying back shares into treasury—key issues
  • Companies House notice on a buy back of shares into treasury

A limited company may hold, or deal with, shares in itself, if certain conditions set out in the Companies Act 2006 (CA 2006) are met. Those shares are held in treasury and are referred to as the company's treasury shares.

This Practice Note focuses only on the specific issues that are relevant when shares are bought back to be held as treasury shares. For information on holding treasury shares and the rights that attach to them, see Practice Note: Holding treasury shares.

Treasury shares were introduced on 1 December 2003 to enable companies with shares included in the Official List of the Financial Conduct Authority (FCA) (being listed shares) and companies with shares traded on AIM, as well as others that met certain requirements, to hold any shares that they bought back as treasury shares. Previously, any shares that were bought back by a company had to be cancelled.

Since their introduction in 2003, there have been two significant changes to the treasury share regime:

  1. on 1 October 2009, with the introduction of the relevant provisions of the CA 2006, the limit on the number of shares that a company could hold in treasury was removed (under the Companies Act 1985, a company's holding of treasury shares had been limited to 10% of the nominal value of the company's issued share capital or 10%