The following Corporate practice note provides comprehensive and up to date legal information covering:
A limited company that proposes to issue redeemable shares must comply with the provisions of the Companies Act 2006 (CA 2006).
A company may wish to issue redeemable shares so that it has an alternative way to return surplus capital to shareholders without having to carry out a purchase of its own shares (also known as a share buyback) or pay a dividend. One of the key reasons why a company may prefer to carry out a redemption rather than a share buyback is that, in contrast to a buyback, stamp duty is not payable on a redemption. For further information on share buybacks, see Practice Notes: Share buybacks—a quick guide and Share buybacks—the legal framework.
A limited company having a share capital may issue redeemable shares. Redeemable shares are a statutory concept contained in the CA 2006, which includes detailed provisions relating to the terms, manner, financing and timing of their redemption.
A limited company having a share capital may issue shares that can be redeemed at the option of the company or a shareholder, provided that:
if it is a private limited company, its articles of association do not exclude or restrict the issue of redeemable shares, and
if it is a public limited company, its articles contain an express authorisation for
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This Practice Note provides guidance on the interpretation and application of the relevant provisions of the CPR. Depending on the court in which your matter is proceeding, you may also need to be mindful of additional provisions—see further below.You should also consider if the proceedings will be
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