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SARA COHEN considers a route to private company share buybacks
KEY POINTS
- Multiple buybacks can help spread the cost.
- Obtaining clearance from HMRC.
- Drafting the buyback agreement.
- Restrictions on unquoted companies.
- Who owns the shares?
There are many reasons why a company might wish to buy shares back from shareholders e.g. to return excess cash to shareholders or to increase the earnings per share of the remaining shares.
In the case of private companies there will frequently be provisions in their articles of association which give them first call if a shareholder wishes to sell and which also allow them to buy shares back compulsorily from directors or employee shareholders...
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