Own Share Purchase Out Of Profits/New Share Issue/Cash - General Meeting Minutes

There are two valid methods for UK private limited companies to approve a purchase of their own shares (“share buyback”) out of distributable profits, the proceeds of a new issue of shares, or cash, under sections 690–700 of the Companies Act 2006.

Such approval forms step 3 of the procedure and requisite templates described in Own Share Purchase/Buyback from Profits and fully detailed in the Share Buyback Out Of Profits Guidance Notes.

Under section 694 of the Companies Act 2006, a private company cannot purchase its own shares unless the terms of the contract to purchase (under step 2) are approved by the shareholders via an ordinary resolution.

Where these minutes fit in the buyback process

These Share Buyback Out of Profits/New Share Issue/Cash – General Meeting Minutes should be used to record shareholder approval of the contract to purchase at a general meeting.

The alternative method is Approval by Written Resolution.

• Step 1: Board approvals to propose the buyback and progress the draft documentation, including Own Share Purchase Out of Profits/New Share Issue/Cash – Board Resolutions.
• Step 2: Contract to purchase (or, if verbal, a memorandum of its terms).
• Step 3: Shareholder approval by ordinary resolution (these minutes record approval at a general meeting).

Pre-meeting inspection requirement

To enable approval by ordinary resolution at a general meeting, a copy of the contract to purchase (or, if verbal, a memorandum of its terms) must be available for inspection:

• At the company’s registered office for at least 15 days before the general meeting; and
• At the general meeting itself.

What the minutes should record at the meeting

• The Chair must confirm that the contract was available for inspection as required.
• The ordinary resolution is proposed to approve the terms of that contract.
• Members holding the shares to be bought cannot vote.
• Once approved, the company may proceed to execute the contract and complete the share purchase.

What to do after approval

• Step 4: Send copies of certain resolutions to Companies House.
• Step 5: File Form SH03 (and SH06 if applicable) within 28 days of purchase.
• Keep the signed contract at the registered office for 10 years.

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