Q&As

When does a share buyback carried out by a limited company take effect?

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Published on LexisPSL on 15/05/2015

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • When does a share buyback carried out by a limited company take effect?

A private limited company will only buy back its own shares off-market pursuant to a share buyback contract, which will include provisions specifying when the relevant share buyback will complete. Usually, a share buyback contract will specify that completion occurs once any conditions in the contract have been satisfied (or, where applicable, waived) and requires certain actions to be taken at completion, eg, the updating of the company's register of members to show it as the holder of the shares, the delivery of the share certificates relating to the shares being transferred to the company and payment by the company of the consideration (see our Precedent: Share buyback contract for an off-market share buyback by a private limited company and Practice Notes: Private company share buybacks—procedure (no payment out of capital under CA 2006, Pt 18, Ch 5) and Private company share buybacks—procedure for payment out of capital under CA 2006, Pt 18, Ch 5).

A public limited company may buy back its shares off-market pursuant to a share buyback contract in the same way as a private limited company. Alternatively, if it is a listed company, it may buy back its shares on-market pursuant to a shareholders' resolution authorising it to do so (see our Practice Notes: Public company share buybacks—procedure for approving a share buyback and Public company share buybacks—procedure for implementing a

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