Redemption of Shares out of Profits and New Issue Templates

Redeemable shares can be redeemed either at the option of the company or at the option of the holder, depending on the terms on which they were issued. The Companies Act 2006 imposes strict rules on how a company may redeem or purchase its own shares out of profits, and on any related new issue of shares.

This section brings together guidance and core board and filing templates for a redemption of shares out of profits, with the option to combine the redemption with a new issue to maintain or adjust the company’s capital structure.

When to Use These Templates

Best for:

Private companies redeeming redeemable shares out of distributable profits
Transactions where a redemption is combined with a new issue of shares
Situations where the company needs clear documentation and filings for a redemption out of profits and associated capital changes

Each template in this section is drafted to comply with the Companies Act 2006 requirements for this type of transaction.

What This Section Covers

Guidance on the legal procedure for redeeming shares out of profits and any linked new issue of shares
Board resolutions to approve the redemption and, where relevant, a new issue
The Companies House filing (form SH02) to record the redemption and any associated share capital changes
A covering letter to accompany the filing to Companies House

🔀 Document Toolkit: Typical Sequence (may vary)

Start with the Guidance Note: Redemption Out Of Profits/New Share Issue, which explains the legal requirements, use of distributable profits and how a redemption can be combined with a new issue.
Use Redemption Out Of Profits/New Share Issue – Board Resolutions to approve the terms and timing of the redemption, any related new issue and the Companies House filings.
Complete CHF - SH02 – Notice Of Consolidation Sub-Division Redemption Of Shares Or Re-Conversion Of Stock Into Shares to notify Companies House of the redemption and any related capital changes, and send it with Redemption Out Of Profits/New Share Issue - Letter To Companies House as the covering letter.

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All Making Changes to Share Capital