Own Share Purchase Out Of Profits/New Share Issue/Cash – Board Minutes & Board Resolutions

These Own Share Purchase Out of Profits/New Share Issue/Cash – Board Minutes and Resolutions are the first step in the process for a private company wishing to purchase its own shares using distributable profits, the proceeds of a new issue of shares, or cash (which may be used in limited circumstances).

The wider process is outlined in Own Share Purchase/Buyback from Profits.

What this template records at board level

This template records the board meeting and resolutions proposing the share buyback.

It covers producing the draft Contract To Purchase and the draft approval resolution, recommending the buyback, and instructing that the contract is made available for inspection (by the vendors).

It should be read in conjunction with Share Buyback Out of Profits Guidance Notes.

Strict legal procedure and updates reflected

Share buybacks must follow a strict legal procedure. These Board Minutes and Resolutions reflect the April 2013 changes to the Companies Act 2006, including the move from special resolution to ordinary resolution for approval of the purchase, the option to use cash (in limited circumstances), and the ability to hold shares in treasury.

They also take into account the minor amendments made to the April 2013 regulations by The Companies Act 2006 (Amendment of Part 18) Regulations 2015, which came into force on 6th April 2015.

In addition, they have been updated following the July 2021 introduction by HMRC of mandatory electronic stamp duty processes to replace their previous physical stamping system.

Key choices to align across the buyback documents

The minutes and resolutions need to be consistent with the route used for the share purchase (distributable profits, a new share issue, or cash).

They must also align with the shareholder approval route used at the next stage, whether approval is given by written resolution or at a general meeting.

• If the company has only one director, paragraphs 1 to 3 and paragraph 10 can be deleted, together with references to “the chairman”.
• 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.
• Where the share purchase route is selected (profits, new issue, or cash), the same route must be used consistently in the related documents, including Own Share Purchase Out of Profits/New Share Issue/Cash – Written Resolution or Own Share Purchase Out of Profits/New Share Issue/Cash – Minutes.
• If the purchase is to be made out of the proceeds of a new issue of shares, paragraph 8 should be retained and the fields completed.
• The provisions dealing with whether a written resolution or a general meeting is used to pass the shareholders’ resolution must be consistent throughout (including the relevant provisions in this template).

Other templates used in the overall procedure

These Board Minutes and Resolutions are Step 1 of the process.

• Step 2: Contract To Purchase – Written contract Share Buyback Contract (or memorandum of terms) made available to members.
• Step 3: Shareholder Approval – Ordinary resolution required; voting restrictions for the selling shareholder, by either General Meeting Minutes or Written Shareholder Resolution.
• Step 4: Post-approval – Send copies of certain resolutions to Companies House using Share Buyback Letter.
• Step 5: Statutory Forms & Stamp Duty – File SH03 (return of purchase of own shares) within 28 days; pay stamp duty (0.5% over £1,000); and file SH06 if shares are cancelled.
• Step 6: After Completion – Keep Contract To Purchase for 10 years, update share capital, and adjust capital redemption reserve if needed.

Different versions of these templates are also available for Employee Share Schemes (ESS).

Own Share Purchase Out Of Profits/New Share Issue/Cash – Board Minutes & Board Resolutions is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.