(1) A limited company may acquire any of its own fully paid shares otherwise than for valuable consideration.
(2) Section 658 does not prohibit—
(a) the acquisition of shares in a reduction of capital duly made;
(b) the purchase of shares in pursuance of an order of the court under—
(i) section 98 (application to court to cancel resolution for re-registration as a private company),
(ii) section 721(6) (powers of court on objection to redemption or purchase of shares out of capital),
(iii) section 759 (remedial order in case of breach of prohibition of public offers by private company), or
(iv) Part 30 (protection of members against unfair prejudice);
(c) the forfeiture of shares, or the acceptance of shares surrendered in lieu, in pursuance of the company's articles, for failure to pay any sum payable in respect of the shares.
(1) This section applies where shares in a limited company—
(a) are taken by a subscriber to the memorandum as nominee of the company,
(b) are issued to a nominee of the company, or
(c) are acquired by a nominee of the company, partly paid up, from a third person.
(2) For all purposes—
(a) the shares are to be treated as held by the nominee on his own account, and
(b) the company is to be regarded as having no beneficial interest in them.
(3) This section does not apply—
(a) to shares acquired otherwise than by subscription by a nominee of a public company, where—
(i) a person acquires shares in the company with financial assistance given to him, directly or indirectly, by the company for the purpose of or in connection with the acquisition, and
(ii) the company has a beneficial interest in the shares;
(b) to shares acquired by a nominee of the company when the company has no beneficial interest in the shares.
661 Liability of others where nominee fails to make payment in respect of shares
(1) This section applies where shares in a limited company—
(a) are taken by a subscriber to the memorandum as nominee of the company,
(b) are issued to a nominee of the company, or
(c) are acquired by a nominee of the company, partly paid up, from a third person.
(2) If the nominee, having been called on to pay any amount for the purposes of paying up, or paying any premium on, the shares, fails to pay that amount within 21 days from being called on to do so, then—
(a) in the case of shares that he agreed to take as subscriber to the memorandum, the other subscribers to the memorandum, and
(b) in any other case, the directors of the company when the shares were issued to or acquired by him,
are jointly and severally liable with him to pay that amount.
(3) If in proceedings for the recovery of an amount under subsection (2) it appears to the court that the subscriber or director—
(a) has acted honestly and reasonably, and
(b) having regard to all the circumstances of the case, ought fairly to be relieved from liability,
the court may relieve him, either wholly or in part, from his liability on such terms as the court thinks fit.
(4) If a subscriber to a company's memorandum or a director of a company has reason to apprehend that a claim will or might be made for the recovery of any such amount from him—
(a) he may apply to the court for relief, and
(b) the court has the same power to relieve him as it would have had in proceedings for recovery of that amount.
(5) This section does not apply to shares acquired by a nominee of the company when the company has no beneficial interest in the shares.
662 Duty to cancel shares in public company held by or for the company
(1) This section applies in the case of a public company—
(a) where shares in the company are forfeited, or surrendered to the company in lieu of forfeiture, in pursuance of the articles, for failure to pay any sum payable in respect of the shares;
(b) where shares in the company are surrendered to the company in pursuance of section 102C(1)(b) of the Building Societies Act 1986 (c. 53);
(c) where shares in the company are acquired by it (otherwise than in accordance with this Part or Part 30 (protection of members against unfair prejudice)) and the company has a beneficial interest in the shares;
(d) where a nominee of the company acquires shares in the company from a third party without financial assistance being given directly or indirectly by the company and the company has a beneficial interest in the shares; or
(e) where a person acquires shares in the company, with financial assistance given to him, directly or indirectly, by the company for the purpose of or in connection with the acquisition, and the company has a beneficial interest in the shares.
(2) Unless the shares or any interest of the company in them are previously disposed of, the company must—
(a) cancel the shares and diminish the amount of the company's share capital by the nominal value of the shares cancelled, and
(b) where the effect is that the nominal value of the company's allotted share capital is brought below the authorised minimum, apply for re-registration as a private company, stating the effect of the cancellation.
(3) It must do so no later than—
(a) in a case within subsection (1)(a) or (b), three years from the date of the forfeiture or surrender;
(b) in a case within subsection (1)(c) or (d), three years from the date of the acquisition;
(c) in a case within subsection (1)(e), one year from the date of the acquisition.
(4) The directors of the company may take any steps necessary to enable the company to comply with this section, and may do so without complying with the provisions of Chapter 10 of Part 17 (reduction of capital).
See also section 664 (re-registration as private company in consequence of cancellation).
(5) Neither the company nor, in a case within subsection (1)(d) or (e), the nominee or other shareholder may exercise any voting rights in respect of the shares.
(6) Any purported exercise of those rights is void.
(1) Where a company cancels shares in order to comply with section 662, it must within one month after the shares are cancelled give notice to the registrar, specifying the shares cancelled.
(2) The notice must be accompanied by a statement of capital.
(3) The statement of capital must state with respect to the company's share capital immediately following the cancellation—
(a) the total number of shares of the company,
(b) the aggregate nominal value of those shares,
(ba) the aggregate amount (if any) unpaid on those shares (whether on account of their nominal value or by way of premium), and
(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, ...
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) 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.
(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
664 Re-registration as private company in consequence of cancellation
(1) Where a company is obliged to re-register as a private company to comply with section 662, the directors may resolve that the company should be so re-registered.
Chapter 3 of Part 3 (resolutions affecting a company's constitution) applies to any such resolution.
(2) The resolution may make such changes—
(a) in the company's name, and
(b) in the company's articles,
as are necessary in connection with its becoming a private company.
(3) The application for re-registration must contain a statement of the company's proposed name on re-registration.
(4) The application must be accompanied by—
(a) a copy of the resolution (unless a copy has already been forwarded under Chapter 3 of Part 3),
(b) a copy of the company's articles as amended by the resolution, and
(c) a statement of compliance.
(5) The statement of compliance required is a statement that the requirements of this section as to re-registration as a private company have been complied with.
(6) The registrar may accept the statement of compliance as sufficient evidence that the company is entitled to be re-registered as a private company.
665 Issue of certificate of incorporation on re-registration
(1) If on an application under section 664 the registrar is satisfied that the company is entitled to be re-registered as a private company, the company shall be re-registered accordingly.
(2) The registrar must issue a certificate of incorporation altered to meet the circumstances of the case.
(3) The certificate must state that it is issued on re-registration and the date on which it is issued.
(4) On the issue of the certificate—
(a) the company by virtue of the issue of the certificate becomes a private company, and
(b) the changes in the company's name and articles take effect.
(5) The certificate is conclusive evidence that the requirements of this Act as to re-registration have been complied with.
(1) If a public company that is required by section 662 to apply to be re-registered as a private company fails to do so before the end of the period specified in subsection (3) of that section, Chapter 1 of Part 20 (prohibition of public offers by private company) applies to it as if it were a private company.
(2) Subject to that, the company continues to be treated as a public company until it is so re-registered.
667 Offence in case of failure to cancel shares or re-register
(1) This section applies where a company, when required to do by section 662—
(a) fails to cancel any shares, or
(b) fails to make an application for re-registration as a private company,
within the time specified in subsection (3) of that section.
(2) An offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(3) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
668 Application of provisions to company re-registering as public company
(1) This section applies where, after shares in a private company—
(a) are forfeited in pursuance of the company's articles or are surrendered to the company in lieu of forfeiture,
(b) are acquired by the company (otherwise than by any of the methods permitted by this Part or Part 30 (protection of members against unfair prejudice)), the company having a beneficial interest in the shares,
(c) are acquired by a nominee of the company from a third party without financial assistance being given directly or indirectly by the company, the company having a beneficial interest in the shares, or
(d) are acquired by a person with financial assistance given to him, directly or indirectly, by the company for the purpose of or in connection with the acquisition, the company having a beneficial interest in the shares,
the company is re-registered as a public company.
(2) In that case the provisions of sections 662 to 667 apply to the company as if it had been a public company at the time of the forfeiture, surrender or acquisition, subject to the following modification.
(3) The modification is that the period specified in section 662(3)(a), (b) or (c) (period for complying with obligations under that section) runs from the date of the re-registration of the company as a public company.
669 Transfer to reserve on acquisition of shares by public company or nominee
(1) Where—
(a) a public company, or a nominee of a public company, acquires shares in the company, and
(b) those shares are shown in a balance sheet of the company as an asset,
an amount equal to the value of the shares must be transferred out of profits available for dividend to a reserve fund and is not then available for distribution.
(2) Subsection (1) applies to an interest in shares as it applies to shares.
As it so applies the reference to the value of the shares shall be read as a reference to the value to the company of its interest in the shares.
670 Public companies: general rule against lien or charge on own shares
(1) A lien or other charge of a public company on its own shares (whether taken expressly or otherwise) is void, except as permitted by this section.
(2) In the case of any description of company, a charge is permitted if the shares are not fully paid up and the charge is for an amount payable in respect of the shares.
(3) In the case of a company whose ordinary business—
(a) includes the lending of money, or
(b) consists of the provision of credit or the bailment (in Scotland, hiring) of goods under a hire-purchase agreement, or both,
a charge is permitted (whether the shares are fully paid or not) if it arises in connection with a transaction entered into by the company in the ordinary course of that business.
(4) In the case of a company that has been re-registered as a public company, a charge is permitted if it was in existence immediately before the application for re-registration.
671 Interests to be disregarded in determining whether company has beneficial interest
In determining for the purposes of this Chapter whether a company has a beneficial interest in shares, there shall be disregarded any such interest as is mentioned in—
section 672 (residual interest under pension scheme or employees' share scheme),
section 673 (employer's charges and other rights of recovery), or
section 674 (rights as personal representative or trustee).
672 Residual interest under pension scheme or employees' share scheme
(1) Where the shares are held on trust for the purposes of a pension scheme or employees' share scheme, there shall be disregarded any residual interest of the company that has not vested in possession.
(2) A “residual interest” means a right of the company to receive any of the trust property in the event of—
(a) all the liabilities arising under the scheme having been satisfied or provided for, or
(b) the company ceasing to participate in the scheme, or
(c) the trust property at any time exceeding what is necessary for satisfying the liabilities arising or expected to arise under the scheme.
(3) In subsection (2)—
(a) the reference to a right includes a right dependent on the exercise of a discretion vested by the scheme in the trustee or another person, and
(b) the reference to liabilities arising under a scheme includes liabilities that have resulted, or may result, from the exercise of any such discretion.
(4) For the purposes of this section a residual interest vests in possession—
(a) in a case within subsection (2)(a), on the occurrence of the event mentioned there (whether or not the amount of the property receivable pursuant to the right is ascertained);
(b) in a case within subsection (2)(b) or (c), when the company becomes entitled to require the trustee to transfer to it any of the property receivable pursuant to that right.
(5) Where by virtue of this section shares are exempt from section 660 or 661 (shares held by company's nominee) at the time they are taken, issued or acquired but the residual interest in question vests in possession before they are disposed of or fully paid up, those sections apply to the shares as if they had been taken, issued or acquired on the date on which that interest vests in possession.
(6) Where by virtue of this section shares are exempt from sections 662 to 668 (shares held by or for public company) at the time they are acquired but the residual interest in question vests in possession before they are disposed of, those sections apply to the shares as if they had been acquired on the date on which the interest vests in possession.
673 Employer's charges and other rights of recovery
(1) Where the shares are held on trust for the purposes of a pension scheme there shall be disregarded—
(a) any charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the purpose of enabling the employer or former employer of a member of the scheme to obtain the discharge of a monetary obligation due to him from the member;
(b) any right to receive from the trustee of the scheme, or as trustee of the scheme to retain, an amount that can be recovered or retained—
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(ii) under section 57 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49), or otherwise, as reimbursement or partial reimbursement for any contributions equivalent premium paid in connection with the scheme under Part 3 of that Act.
(2) Where the shares are held on trust for the purposes of an employees' share scheme, there shall be disregarded any charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the purpose of enabling the employer or former employer of a member of the scheme to obtain the discharge of a monetary obligation due to him from the member.
Where the company is a personal representative or trustee, there shall be disregarded any rights that the company has in that capacity including, in particular—
(a) any right to recover its expenses or be remunerated out of the estate or trust property, and
(b) any right to be indemnified out of that property for any liability incurred by reason of any act or omission of the company in the performance of its duties as personal representative or trustee.
(1) In this Chapter “pension scheme” means a scheme for the provision of benefits consisting of or including relevant benefits for or in respect of employees or former employees.
(2) In subsection (1) “relevant benefits” means any pension, lump sum, gratuity or other like benefit given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death.
For the purposes of this Chapter references to “employer” and “employee”, in the context of a pension scheme or employees' share scheme, shall be read as if a director of a company were employed by it.
(1) In this Chapter “financial assistance” means—
(a) financial assistance given by way of gift,
(b) financial assistance given—
(i) by way of guarantee, security or indemnity (other than an indemnity in respect of the indemnifier's own neglect or default), or
(ii) by way of release or waiver,
(c) financial assistance given—
(i) by way of a loan or any other agreement under which any of the obligations of the person giving the assistance are to be fulfilled at a time when in accordance with the agreement any obligation of another party to the agreement remains unfulfilled, or
(ii) by way of the novation of, or the assignment (in Scotland, assignation) of rights arising under, a loan or such other agreement, or
(d) any other financial assistance given by a company where—
(i) the net assets of the company are reduced to a material extent by the giving of the assistance, or
(ii) the company has no net assets.
(2) “Net assets” here means the aggregate amount of the company's assets less the aggregate amount of its liabilities.
(3) For this purpose a company's liabilities include—
(a) where the company draws up Companies Act individual accounts, any provision of a kind specified for the purposes of this subsection by regulations under section 396, and
(b) where the company draws up IAS individual accounts, any provision made in those accounts.
678 Assistance for acquisition of shares in public company
(1) Where a person is acquiring or proposing to acquire shares in a public company, it is not lawful for that company, or a company that is a subsidiary of that company, to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place.
(2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in it or its holding company if—
(a) the company's principal purpose in giving the assistance is not to give it for the purpose of any such acquisition, or
(b) the giving of the assistance for that purpose is only an incidental part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the company.
(3) Where—
(a) a person has acquired shares in a company, and
(b) a liability has been incurred (by that or another person) for the purpose of the acquisition,
it is not lawful for that company, or a company that is a subsidiary of that company, to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability if, at the time the assistance is given, the company in which the shares were acquired is a public company.
(4) Subsection (3) does not prohibit a company from giving financial assistance if—
(a) the company's principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in the company or its holding company, or
(b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the company.
(5) This section has effect subject to sections 681 and 682 (unconditional and conditional exceptions to prohibition).
679 Assistance by public company for acquisition of shares in its private holding company
(1) Where a person is acquiring or proposing to acquire shares in a private company, it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of the acquisition before or at the same time as the acquisition takes place.
(2) Subsection (1) does not prohibit a company from giving financial assistance for the acquisition of shares in its holding company if—
(a) the company's principal purpose in giving the assistance is not to give it for the purpose of any such acquisition, or
(b) the giving of the assistance for that purpose is only an incidental part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the company.
(3) Where—
(a) a person has acquired shares in a private company, and
(b) a liability has been incurred (by that or another person) for the purpose of the acquisition,
it is not lawful for a public company that is a subsidiary of that company to give financial assistance directly or indirectly for the purpose of reducing or discharging the liability.
(4) Subsection (3) does not prohibit a company from giving financial assistance if—
(a) the company's principal purpose in giving the assistance is not to reduce or discharge any liability incurred by a person for the purpose of the acquisition of shares in its holding company, or
(b) the reduction or discharge of any such liability is only an incidental part of some larger purpose of the company,
and the assistance is given in good faith in the interests of the company.
(5) This section has effect subject to sections 681 and 682 (unconditional and conditional exceptions to prohibition).
(1) If a company contravenes section 678(1) or (3) or section 679(1) or (3) (prohibited financial assistance) an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(2) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);
(b) on summary conviction—
(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);
(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).
(1) Neither section 678 nor section 679 prohibits a transaction to which this section applies.
(2) Those transactions are—
(a) a distribution of the company's assets by way of—
(i) dividend lawfully made, or
(ii) distribution in the course of a company's winding up;
(b) an allotment of bonus shares;
(c) a reduction of capital under Chapter 10 of Part 17;
(d) a redemption of shares under Chapter 3 or a purchase of shares under Chapter 4 of this Part;
(e) anything done in pursuance of an order of the court under Part 26 or 26A (order sanctioning compromise or arrangement with members or creditors);
(f) anything done under an arrangement made in pursuance of section 110 of the Insolvency Act 1986 (c. 45) or Article 96 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (liquidator in winding up accepting shares as consideration for sale of company's property);
(g) anything done under an arrangement made between a company and its creditors that is binding on the creditors by virtue of Part 1 of the Insolvency Act 1986 or Part 2 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).
(1) Neither section 678 nor section 679 prohibits a transaction to which this section applies—
(a) if the company giving the assistance is a private company, or
(b) if the company giving the assistance is a public company and—
(i) the company has net assets that are not reduced by the giving of the assistance, or
(ii) to the extent that those assets are so reduced, the assistance is provided out of distributable profits.
(2) The transactions to which this section applies are—
(a) where the lending of money is part of the ordinary business of the company, the lending of money in the ordinary course of the company's business;
(b) the provision by the company, in good faith in the interests of the company or its holding company, of financial assistance for the purposes of an employees' share scheme;
(c) the provision of financial assistance by the company for the purposes of or in connection with anything done by the company (or another company in the same group) for the purpose of enabling or facilitating transactions in shares in the first-mentioned company or its holding company between, and involving the acquisition of beneficial ownership of those shares by—
(i) bona fide employees or former employees of that company (or another company in the same group), or
(ii) spouses or civil partners, widows, widowers or surviving civil partners, or minor children or step-children of any such employees or former employees;
(d) the making by the company of loans to persons (other than directors) employed in good faith by the company with a view to enabling those persons to acquire fully paid shares in the company or its holding company to be held by them by way of beneficial ownership.
(3) The references in this section to “net assets” are to the amount by which the aggregate of the company's assets exceeds the aggregate of its liabilities.
(4) For this purpose—
(a) the amount of both assets and liabilities shall be taken to be as stated in the company's accounting records immediately before the financial assistance is given, and
(b) “liabilities” includes any amount retained as reasonably necessary for the purpose of providing for a liability the nature of which is clearly defined and that is either likely to be incurred or certain to be incurred but uncertain as to amount or as to the date on which it will arise.
(5) For the purposes of subsection (2)(c) a company is in the same group as another company if it is a holding company or subsidiary of that company or a subsidiary of a holding company of that company.
(1) In this Chapter—
“distributable profits”, in relation to the giving of any financial assistance—
means those profits out of which the company could lawfully make a distribution equal in value to that assistance, and
includes, in a case where the financial assistance consists of or includes, or is treated as arising in consequence of, the sale, transfer or other disposition of a non-cash asset, any profit that, if the company were to make a distribution of that character would be available for that purpose (see section 846); and
“distribution” has the same meaning as in Part 23 (distributions) (see section 829).
(2) In this Chapter—
(a) a reference to a person incurring a liability includes his changing his financial position by making an agreement or arrangement (whether enforceable or unenforceable, and whether made on his own account or with any other person) or by any other means, and
(b) a reference to a company giving financial assistance for the purposes of reducing or discharging a liability incurred by a person for the purpose of the acquisition of shares includes its giving such assistance for the purpose of wholly or partly restoring his financial position to what it was before the acquisition took place.
684 Power of limited company to issue redeemable shares
(1) A limited company having a share capital may issue shares that are to be redeemed or are liable to be redeemed at the option of the company or the shareholder (“redeemable shares”), subject to the following provisions.
(2) The articles of a private limited company may exclude or restrict the issue of redeemable shares.
(3) A public limited company may only issue redeemable shares if it is authorised to do so by its articles.
(4) No redeemable shares may be issued at a time when there are no issued shares of the company that are not redeemable.
(1) The directors of a limited company may determine the terms, conditions and manner of redemption of shares if they are authorised to do so—
(a) by the company's articles, or
(b) by a resolution of the company.
(2) A resolution under subsection (1)(b) may be an ordinary resolution, even though it amends the company's articles.
(3) Where the directors are authorised under subsection (1) to determine the terms, conditions and manner of redemption of shares—
(a) they must do so before the shares are allotted, and
(b) any obligation of the company to state in a statement of capital the rights attached to the shares extends to the terms, conditions and manner of redemption.
(4) Where the directors are not so authorised, the terms, conditions and manner of redemption of any redeemable shares must be stated in the company's articles.
(1) Redeemable shares in a limited company may not be redeemed unless they are fully paid.
(2) The terms of redemption of shares in a limited company may provide that the amount payable on redemption may, by agreement between the company and the holder of the shares, be paid on a date later than the redemption date.
(3) Unless redeemed in accordance with a provision authorised by subsection (2), the shares must be paid for on redemption.
(1) A private limited company may redeem redeemable shares out of capital in accordance with Chapter 5.
(2) Subject to that, redeemable shares in a limited company may only be redeemed out of—
(a) distributable profits of the company, or
(b) the proceeds of a fresh issue of shares made for the purposes of the redemption.
(3) Any premium payable on redemption of shares in a limited company must be paid out of distributable profits of the company, subject to the following provision.
(4) If the redeemable shares were issued at a premium, any premium payable on their redemption may be paid out of the proceeds of a fresh issue of shares made for the purposes of the redemption, up to an amount equal to—
(a) the aggregate of the premiums received by the company on the issue of the shares redeemed, 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.
(5) 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 (4).
(6) This section is subject to section 735(4) (terms of redemption enforceable in a winding up).
Where shares in a limited company are redeemed—
(a) the shares are treated as cancelled, and
(b) the amount of the company's issued share capital is diminished accordingly by the nominal value of the shares redeemed.
(1) If a limited company redeems any redeemable shares it must within one month after doing so give notice to the registrar, specifying the shares redeemed.
(2) The notice must be accompanied by a statement of capital.
(3) The statement of capital must state with respect to the company's share capital immediately following the redemption—
(a) the total number of shares of the company,
(b) the aggregate nominal value of those shares,
(ba) the aggregate amount (if any) unpaid on those shares (whether on account of their nominal value or by way of premium), and
(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, ...
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) 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.
(5) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
690 Power of limited company to purchase own shares
(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.
(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.
(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.
(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 (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) Subject to subsections (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).
(1) A limited company may only purchase its own shares—
(a) by an off-market purchase, authorised in accordance with section 693A or in pursuance of a contract approved in advance in accordance with section 694;
(b) by a market purchase, authorised in accordance with section 701.
(2) A purchase is “off-market” if the shares either—
(a) are purchased otherwise than on a recognised investment exchange, or
(b) are purchased on a recognised investment exchange but are not subject to a marketing arrangement on the exchange.
(3) For this purpose a company's shares are subject to a marketing arrangement on a recognised investment exchange if—
(a) they are listed under Part 6 of the Financial Services and Markets Act 2000 (c. 8), or
(b) the company has been afforded facilities for dealings in the shares to take place on the exchange—
(i) without prior permission for individual transactions from the authority governing that investment exchange, and
(ii) without limit as to the time during which those facilities are to be available.
(4) A purchase is a “market purchase” if it is made on a recognised investment exchange and is not an off-market purchase by virtue of subsection (2)(b).
(5) In this section “recognised investment exchange” means a recognised investment exchange (within the meaning of Part 18 of the Financial Services and Markets Act 2000) other than an overseas exchange (within the meaning of that Part).
693A Authority for off-market purchase for the purposes of or pursuant to an employees' share scheme
(1) A company may make an off-market purchase of its own shares for the purposes of or pursuant to an employees' share scheme if the purchase has first been authorised by a resolution of the company under this section.
(2) That authority—
(a) may be general or limited to the purchase of shares of a particular class or description, and
(b) may be unconditional or subject to conditions.
(3) The authority must—
(a) specify the maximum number of shares authorised to be acquired, and
(b) determine both the maximum and minimum prices that may be paid for the shares.
(4) The authority may be varied, revoked or from time to time renewed by a resolution of the company.
(5) A resolution conferring, varying or renewing authority must specify a date on which it is to expire, which must not be later than five years after the date on which the resolution is passed.
(6) A company may make a purchase of its own shares after the expiry of the time limit specified if—
(a) the contract of purchase was concluded before the authority expired, and
(b) the terms of the authority permitted the company to make a contract of purchase that would or might be executed wholly or partly after its expiration.
(7) A resolution to confer or vary authority under this section may determine the maximum or minimum price for purchase by—
(a) specifying a particular sum, or
(b) providing a basis or formula for calculating the amount of the price (but without reference to any person's discretion or opinion).
(8) Chapter 3 of Part 3 (resolutions affecting a company's constitution) applies to a resolution under this section.
(1) Subject to section 693A, A company may only make an off-market purchase of its own shares in pursuance of a contract approved prior to the purchase in accordance with this section.
(2) Either—
(a) the terms of the contract must be authorised by a . . . resolution of the company before the contract is entered into, or
(b) the contract must provide that no shares may be purchased in pursuance of the contract until its terms have been authorised by a . . . resolution of the company.
(3) The contract may be a contract, entered into by the company and relating to shares in the company, that does not amount to a contract to purchase the shares but under which the company may (subject to any conditions) become entitled or obliged to purchase the shares.
(4) The authority conferred by a resolution under this section may be varied, revoked or from time to time renewed by a . . . resolution of the company.
(5) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than five years after the date on which the resolution is passed.
(6) A resolution conferring, varying, revoking or renewing authority under this section is subject to—
section 695 (exercise of voting rights), and
section 696 (disclosure of details of contract).
695 Resolution authorising off-market purchase: exercise of voting rights
(1) This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section 694 (authority for off-market purchase of own shares).
(2) Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member.
(3) Where the resolution is proposed at a meeting of the company, it is not effective if—
(a) any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and
(b) the resolution would not have been passed if he had not done so.
(4) For this purpose—
(a) a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;
(b) any member of the company may demand a poll on that question;
(c) a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.
696 Resolution authorising off-market purchase: disclosure of details of contract
(1) This section applies in relation to a resolution to confer, vary, revoke or renew authority for the purposes of section 694 (authority for off-market purchase of own shares).
(2) A copy of the contract (if it is in writing) or a memorandum setting out its terms (if it is not) must be made available to members—
(a) in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him;
(b) in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
(i) at the company's registered office for not less than 15 days ending with the date of the meeting, and
(ii) at the meeting itself.
(3) A memorandum of contract terms so made available must include the names of the members holding shares to which the contract relates.
(4) A copy of the contract so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the contract itself.
(5) The resolution is not validly passed if the requirements of this section are not complied with
(1) A company may only agree to a variation of a contract authorised under section 694 (authority for off-market purchase) if the variation is approved in advance in accordance with this section.
(2) The terms of the variation must be authorised by a . . . resolution of the company before it is agreed to.
(3) That authority may be varied, revoked or from time to time renewed by a . . . resolution of the company.
(4) In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than five years after the date on which the resolution is passed.
(5) A resolution conferring, varying, revoking or renewing authority under this section is subject to—
section 698 (exercise of voting rights), and
section 699 (disclosure of details of variation).