Own Share Purchase Out Of Capital – Board Resolution (ESS – Multiple Buybacks)

Companies may wish to “buy back” or purchase their own shares.

Use this board resolution for ESS multiple buybacks

This Own Share Purchase Out of Capital – Board Resolution (ESS – Multiple Buybacks) reflects one of the April 2013 changes to the Companies Act 2006.

With effect from 30 April 2013, companies can by ordinary resolution authorise multiple buybacks of their own shares, where the buybacks are for the purposes of an employees’ share scheme.

What this board resolution records

This Board Resolution (ESS – Multiple Buybacks) records the directors’ decision that the shareholders should be asked to consider and, if appropriate, pass a draft resolution to authorise multiple buybacks of shares.

The document should be used in conjunction with the “Own Share Purchase Out of Capital – Guidance Notes.”

What the shareholder authority may cover

The authority given by the shareholders’ ordinary resolution may be general or limited to the purchase of shares of a particular class or description. It may be an unconditional authority or subject to conditions.

• The authority must specify the maximum number of shares authorised to be acquired.
• It must determine both the maximum and minimum prices that may be paid for the shares.
• This can be done by specifying a particular sum or by providing a basis or formula for calculating the amount of the price, but without reference to any person’s discretion or opinion.

Duration, consistency and internal adaptations

The authority may be varied, revoked or from time to time renewed by a resolution of the company.

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.

The wording of the draft shareholders’ resolution must be consistent with the wording of either “Own Share Purchase out of Capital – Written Resolution (ESS – Multiple Buybacks)” or “Own Share Purchase out of Capital – Minutes (ESS – Multiple Buybacks)”, depending on whether the shareholders’ resolution is to be passed as a written resolution or in a general meeting of the shareholders respectively.

• If the company has only one director, then paragraphs 1 to 3 and paragraph 8 can be deleted, together with references to “the chairman”.
• Any references to the “Company Secretary” should be deleted if the company does not have one, and replaced with the name of the director responsible for secretarial duties.
• Paragraphs 5, 6 and 7 should be amended depending on whether a written resolution or a general meeting is to be used to pass the resolution, and they must be consistent with each other.

Own Share Purchase Out Of Capital – Board Resolution (ESS – Multiple Buybacks) is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.