The Companies Act 2006 (Amendment of Part 18) Regulations 2013

Payment out of capital for purchase of own shares for an employees’ share scheme

12.  After section 720 of the Act, insert—

“Requirements for payment out of capital: employees’ share schemes

720A    Reduced requirements for payment out of capital for purchase of own shares for the purposes of or pursuant to an employees’ share scheme

(1) Section 713(1) does not apply to the purchase out of capital by a private company of its own shares for the purposes of or pursuant to an employees’ share scheme when approved by special resolution supported by a solvency statement.

(2) For the purposes of this section a resolution is supported by a solvency statement if—

(a) the directors of the company make a solvency statement (see section 643) not more than 15 days before the date on which the resolution is passed, and

(b) the resolution and solvency statement are registered in accordance with section 720B.

(3) Where the resolution is proposed as a written resolution, a copy of the solvency statement must be sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to the member.

(4) Where the resolution is proposed at a general meeting, a copy of the solvency statement must be made available for inspection by members of the company throughout that meeting.

(5) The validity of a resolution is not affected by a failure to comply with subsection (3) or (4).

(6) Section 717 (resolution authorising payment: exercise of voting rights) applies to a resolution under this section as it applies to a resolution under section 716.

720B    Registration of resolution and supporting documents for purchase of own shares for the purposes of or pursuant to an employees’ share scheme

(1) Within 15 days after the passing of the resolution for a payment out of capital by a private company for the purchase of its own shares for the purposes of or pursuant to an employees’ share scheme the company must deliver to the registrar–

(a) a copy of the solvency statement,

(b) a copy of the resolution, and

(c) a statement of capital.

(2) The statement of capital must state with respect to the company’s share capital as reduced by the resolution—

(a) the total number of shares of the company,

(b) the aggregate nominal value of those shares,

(c) for each class of shares—

(i) prescribed particulars of the rights attached to the shares,

(ii) the total number of shares of that class, and

(iii) the aggregate nominal value of shares of that class, and

(d) the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share of by way of premium).

(3) The registrar must register the documents delivered to him under subsection (1) on receipt.

(4) The resolution does not take effect until those documents are registered.

(5) The company must also deliver to the registrar, within 15 days after the resolution is passed, a statement by the directors confirming that the solvency statement was—

(a) made not more than 15 days before the date on which the resolution was passed, and

(b) provided to members in accordance with section 720A(3) or (4).

(6) The validity of a resolution is not affected by—

(a) a failure to deliver the documents required to be delivered to the registrar under subsection (1) within the time specified in that subsection, or

(b) a failure to comply with subsection (5).

(7) If the company delivers to the registrar a solvency statement that was not provided to members in accordance with section 720A(3) or (4), an offence is committed by every officer of the company who is in default.

(8) If default is made in complying with this section, an offence is committed by–

(a) the company, and

(b) every officer of the company who is in default.

(9) A person guilty of an offence under subsection (7) or (8) is liable–

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.”.