8/16/2019 Buy-Back Crib Sheet_sample

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Share Buy-Back 

1. 658 Generally a company is forbidden from buying its own shares ecept in accordance with

!" #$$6

a. 690(1) provides that company may only buy back its shares if it not prohibited from doing so

 by its articles

a.i. Model Articles have no restrictions

 b. 691(1) nly shares !hich are fully paid can be bought back 

 b.i. MA "1 it can be assumed that shares are fully paid

c. 690(") #uy$back cannot take place if% as a result% there !ould be only redeemable shares in

issue

c.i. &'& #A*A+& ,'-

d. 691(") hen shares are bought% the company must pay for them upon purchase

#. %ow can shares be funded&

a. 69"(")(a)(i) ut of sufficient distributable profits

a.i. &'& /2- 3 *,, A&&4+-

 b. 69"(")(a)(ii) ut of the proceeds of a fresh issue of shares made for the purpose of financing

the purchasec. /25A- &M/A+ then 709(1) ut of capital

c.i. 4nless articles forbid this 8 Model Articles do not

'. (hat type of purchase is it&

a. /rivate company then probably off-market 69(1)(a)

a.i. &ontract effecting buy$back has to be approved by ,/&2A* ,*4-2+ or be

conditional on approval being granted 69:(")

a.i.1. #oard esolution to draft contract 3 call ;M<!ritten resolution

a.i.". ,pecial resolution approving contract

a.i.. #oard resolution e=ecuting contract

 b. /ublic company can be off-market 69(") b.i. &ontract effecting buy$back has to be approved by ,/&2A* ,*4-2+ or be

conditional on approval being granted 69:(")

 b.i.1. #oard esolution to draft contract 3 call ;M

 b.i.". ,pecial resolution approving contract

 b.i.. #oard resolution e=ecuting contract

c. 701(1) -o make a market purchase then need an >2+A ,*4-2+ of shareholders

c.i. 701() stating the ma=imum number of shares to be authorised to be ac?uired 3 the

ma=imum 3 minimum prices to be paid for the shares

c.ii. 701(@) Authority to directors must state the period for !hich the authority is to last%

for a ma=imum of @ years

c.ii.1. #oard resolution to call ;M (or !ritten resolution if private company)c.ii.". rdinary resolution

c.ii.. #oard resolution to effect market purchase

). *rocedure for buy-back out of distributable profits&

a. 2s the meeting ?uorate

a.i. MA 11(")

a.ii. rdinary resolution of shareholders re?uired to alter ?uorum re?uirements

 b. >o any declarations of interests need to be made

 b.i. 2f shareholder !ith !hom buy back is to take place is also a director then director

must declare interest under 177 3 !ill be ineligible to vote or count in ?uorum MA 1:

c. >irectors have to asses if buy$back !ill promote the success of the company 17" c.i. A//* - A&-,

c.i.1. Are there sufficient distributable profits

c.i.". 2s the company cash$rich