Public company share buybacks—procedure for approving a share buyback
Public company share buybacks—procedure for approving a share buyback

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

  • Public company share buybacks—procedure for approving a share buyback
  • Off-market or on-market?
  • Initial considerations and financing
  • Shareholder approval of a share buyback
  • Off-market share buyback (other than for the purposes of, or pursuant to, an employees’ share scheme)—shareholder approval of the share buyback contract
  • Off-market share buyback—shareholder authorisation of employees' share scheme buybacks
  • On-market share buyback—shareholder authorisation
  • Duration of shareholder authority
  • General meeting approving a share buyback
  • Steps to be taken after the general meeting approving a share buyback
  • more

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 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 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 public limited company may buy back its shares off-market or on-market.

Usually, a listed company that proposes to buyback its shares will do so on-market. However, some structures used by a listed company to buyback its shares will involve off-market purchases (eg, B share schemes often use an intermediary to acquire the shares on-market and the company then buys the shares from