The Companies Act 2006 (Amendment of Part 18) Regulations 2015

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations come into force on 6th April 2015 and extend to the whole of the United Kingdom, reflecting the extent of the Companies Act 2006 (c.46).

These Regulations amend Part 18 (Acquisition by limited company of its own shares) of the Companies Act 2006 (“CA 2006”).

Regulation 3 provides that a company that buys back its own shares may finance the purchase in accordance with Chapter 5 or, without Chapter 5 applying, under section 692(1ZA) CA 2006. Section 692(1ZA) specifies the maximum value of shares that may be bought back under this procedure, being the aggregate purchase price in a financial year, as the lower of £15,000 or 5% of the nominal value of the fully paid share capital as at the beginning of the financial year.

Regulation 4 removes the requirement to deliver a statement of capital to the registrar when shares are cancelled under section 708(2) CA 2006 following a purchase by a company of its own shares for the purposes of an employees’ share scheme, if the statement of capital would be identical to that delivered under section 720B(1) CA 2006 (registration of documents for purchase of own shares for the purpose of or pursuant to an employees’ share scheme).

Regulation 5 inserts a new subsection into section 709 CA 2006 that provides that Chapter 5 is subject to the procedure in section 692(1ZA) CA 2006 to ensure that there is no conflict.

Regulation 6 amends section 723 CA 2006 so that where a company buys back its own shares under section 720A CA 2006 for the purposes of or pursuant to an employees’ share scheme, the time limit for the return of the shares to the company such that the obligation to pay arises is specified in relation to the date the resolution approving such buy back is passed. This is to allow a company to take advantage of the option of deferred payment in section 691(3) CA 2006.

Regulations 7, 8 and 9 ensure that shares bought back under section 692(1ZA) CA 2006 and those bought back under Chapter 5 of Part 18 are treated consistently in accountancy terms. In particular, regulation 7 prevents shares bought back under section 692(1ZA) CA 2006 from being held in treasury.

A full regulatory impact assessment has not been produced for this instrument as the effect is already included in the impact assessment prepared for the Companies Act 2006 (Amendment of Part 18) Regulations 2013 (S.I. 2013/999). This impact assessment is available from the Business Environment Directorate, Department for Business, Innovation and Skills, 1 Victoria Street, London SW1H 0ET or from www.gov.uk/bis and is annexed to the Explanatory Memorandum which is available alongside the 2013 instrument at www.legislation.gov.uk.