Redemption of Shares out of Capital Templates

Redeemable shares can be redeemed either at the option of the company or at the option of the holder, depending on the rights attached to those shares. Where a company redeems shares out of capital, the Companies Act 2006 imposes particularly strict requirements, including director approvals, shareholder approvals, statutory statements and public notice.

This section brings together guidance and supporting templates for a redemption of shares out of capital, including board and shareholder approvals, the directors’ statement, Companies House filings and the required public notice.

When to Use These Templates

Best for:

Private companies redeeming redeemable shares using capital where distributable profits or the proceeds of a fresh issue are not sufficient.
Situations where a company needs a clear, documented process for a capital-funded redemption, including statutory notices and filings.
Transactions where directors and shareholders must be comfortable that the company will remain solvent after the proposed payment out of capital.

What This Section Covers

Guidance on the legal procedure for a redemption out of capital and the conditions that must be met.
Board resolutions to approve the proposed redemption out of capital and related steps.
Shareholder approvals by written resolution or at a general meeting.
The Redemption Out Of Capital – Directors’ Statement, in the Companies Act 2006 prescribed format.
The Redemption Out Of Capital – Public Notice to be published, for example, in the Gazette.
Companies House filings (form SH02) and two covering letters for submissions to Companies House.

🔀 Document Toolkit: Typical Sequence (may vary)

Start with Guidance Note: Redemption Out Of Capital, which explains the statutory conditions, timetable and documentation required for a redemption funded out of capital.
Use Redemption Out Of Capital – Board Resolutions to document the directors’ approval of the redemption, their consideration of solvency and their decision to proceed with the capital procedure.
Obtain shareholder approval using either Redemption Out Of Capital – Written Resolution or Redemption Out Of Capital – General Meeting Minutes, depending on whether you proceed by written resolution or meeting.
Prepare the directors’ solvency statement using Redemption Out Of Capital – Directors’ Statement and arrange publication of the Redemption Out Of Capital – Public Notice in the required form.
File the necessary documents at Companies House using CHF - SH02 – Notice Of Consolidation Sub-Division Redemption Of Shares Or Re-Conversion Of Stock Into Shares, together with Redemption Out Of Capital – 1st Letter To Companies House and Redemption Out Of Capital – 2nd Cover Letter To Companies House as appropriate.

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