Private company share buybacks—financing
Private company share buybacks—financing

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

  • Private company share buybacks—financing
  • Off-market or on-market?
  • Financing options—purchase price
  • Financing options—premium payable on the shares
  • Payments other than the purchase price
  • Price of shares to be acquired
  • Timing and manner of payment
  • Carrying out an off-market share buyback

A limited company may buy back shares in itself, if certain conditions set out in the Companies Act 2006 (CA 2006) are met. This is known as a share buyback or a purchase of own shares. In addition to the provisions of the CA 2006, there are additional rules and guidelines that are relevant to a listed company or an AIM company.

The restrictions in the CA 2006 relating to share buybacks do not apply to unlimited companies. For further information on this type of company, see Practice Note: Unlimited companies.

For an introduction to share buybacks, see Practice Note: Share buybacks—a quick guide.

For a consideration of the law applicable to a share buyback and information on why a company might wish to carry out one, see Practice Note: Share buybacks—the legal framework.

Off-market or on-market?

A private limited company will only buy back its shares off-market. Therefore, this Practice Note does not deal with on-market share buybacks.

For an explanation of the differences between an off-market share buyback and an on-market share buyback, see Practice Note: Share buybacks—the legal framework.

For information on share buybacks by public companies, both off-market and on-market, see Practice Notes: Public company share buybacks—initial considerations, Public company share buybacks—financing, Public company share buybacks—procedure for approving a share buyback, Public company share buybacks—procedure for implementing a share buyback, The