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Who will buy?
Key points
- The procedure for a company to purchase its own shares is strict and complex and legal advice should always be obtained.
- Buy-backs are useful to return cash to shareholders or to restructure the balance sheet of a company.
- A company can only buy back shares that are fully paid.
- Companies Act 2006 s 694 permits private limited companies to buy back their own shares as long as their articles do not prohibit them from doing so.
- A company must usually use all of its distributable profits and the proceeds of any fresh issue of shares made for the purpose before it can use its share capital and share premium accounts to fund a buy-back.
A useful way to return cash to shareholders is by way of a purchase by the company of its own shares – often referred to as a ‘buy-back’. This may have...
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