Public company redemptions of shares—initial considerations

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

  • Public company redemptions of shares—initial considerations
  • Initial considerations
  • Terms, conditions and manner of redemption
  • Share capital requirements—number of shares to be redeemed
  • Share capital requirements—shares must be fully paid
  • Shareholder approvals—class rights
  • Shareholder approvals—allotment and pre-emption
  • Substantial property transactions
  • Financial assistance
  • Banking restrictions
  • More...

Public company redemptions of shares—initial considerations

A limited company that proposes to carry out a redemption of redeemable shares must comply with the provisions of the Companies Act 2006 (CA 2006). In addition to the provisions of CA 2006, there are other rules and guidelines that are relevant to a listed company or an AIM company. In particular, a listed company must have regard to the Listing Rules (LRs) and the Disclosure Guidance and Transparency Rules (DTRs). An AIM company must have regard to the AIM Rules for Companies (AIM Rules) and is also subject to DTR 5. Both types of company may also follow institutional investor guidance.

For a discussion of the legal requirements that a company must comply with in order to issue redeemable shares, and the reasons why a company may redeem its shares, see Practice Note: Issue of redeemable shares.

Initial considerations

Before proceeding with a redemption of shares, a public company should consider:

  1. the terms, conditions and manner of the redemption of those shares

  2. whether its share capital meets the requirements for a redemption of shares laid down by CA 2006, Pt 18, the LRs and institutional investor guidance, and whether it will do so following the redemption

  3. any approvals that may need to be obtained in relation to the redemption of shares

  4. the relevance of the CA 2006 provisions relating to substantial

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