A Share Buyback is likely to be used to allow a shareholder to leave a company. This could be due to retirement or for personal reasons.
Attwells Solicitors has a lot of experience of acting for companies undertaking share buybacks, our Company Share Buybacks page provides you with a brief summary of the key points that must be considered when contemplating a Share Buyback. If, upon review, a Share Buyback sounds like the right choice for your Company to proceed with then please do look to get in touch with us.
Share Buyback requirements
To undertake a Share Buyback a private limited company must comply with the Companies Act 2006. Failure to comply with these requirements will result in the buyback being held as void, and both the Company and its officers being held as committing an offence under the Act. This can lead to the Company’s officers being potentially liable to incur an unlimited fine or suffer a prison sentence up to two years, or indeed both.
It is therefore prudent that the procedure afforded by the 2006 Act is both understood and followed correctly.
Any limited company can buy back its own shares and the legislation does not require a specific provision to be contained within a company’s articles.
However, should a company’s articles expressly prohibit the right to buy back their own shares then the Articles of Association shall need to be amended before the buyback proposal can be completed.