Companies Act 2006

General provisionsU.K.

690Power of limited company to purchase own sharesU.K.

(1)A limited company having a share capital may purchase its own shares (including any redeemable shares), subject to—

(a)the following provisions of this Chapter, and

(b)any restriction or prohibition in the company's articles.

(2)A limited company may not purchase its own shares if as a result of the purchase there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.

691Payment for purchase of own sharesU.K.

(1)A limited company may not purchase its own shares unless they are fully paid.

(2)Where a limited company purchases its own shares, the shares must be paid for on purchase.

[F1(3)But subsection (2) does not apply in a case where a private limited company is purchasing shares for the purposes of or pursuant to an employees' share scheme.]

Textual Amendments

692Financing of purchase of own sharesU.K.

[F2[F3(1)A private limited company may purchase its own shares out of capital in accordance with Chapter 5.

(1ZA)If authorised to do so by its articles, a private limited company may purchase its own shares out of capital otherwise than in accordance with Chapter 5, up to an aggregate purchase price in a financial year of the lower of—

(a)£15,000, or

(b)the nominal value of 5% of its fully paid share capital as at the beginning of the financial year.]

(1A)If the share capital of the company is not denominated in sterling, the value in sterling of the share capital shall be calculated for the purposes of subsection [F4(1ZA)(b)] at an appropriate spot rate of exchange.

(1B)The rate must be a rate prevailing on a day specified in the resolution authorising the purchase of the shares.]

(2)[F5Subject to [F6subsections (1) and (1ZA)]]—

(a)a limited company may only purchase its own shares out of—

(i)distributable profits of the company, or

(ii)the proceeds of a fresh issue of shares made for the purpose of financing the purchase, and

(b)any premium payable on the purchase by a limited company of its own shares must be paid out of distributable profits of the company, subject to subsection (3).

(3)If the shares to be purchased were issued at a premium, any premium payable on their purchase by the company may be paid out of the proceeds of a fresh issue of shares made for the purpose of financing the purchase, up to an amount equal to—

(a)the aggregate of the premiums received by the company on the issue of the shares purchased, or

(b)the current amount of the company's share premium account (including any sum transferred to that account in respect of premiums on the new shares),

whichever is the less.

(4)The amount of the company's share premium account is reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made under subsection (3).

(5)This section has effect subject to section 735(4) (terms of purchase enforceable in a winding up).

Textual Amendments