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These Regulations come into force on 30th April 2013 and extend to the whole of the United Kingdom, reflecting the extent of the Companies Act 2006 (c.46).
These Regulations amend Part 18 (Acquisition by limited company of its own shares) of the Companies Act 2006.
Regulation 3 removes the requirement on private limited companies to pay on purchase the price of shares in full in cases where the buy back is for an employees' share scheme; this will allow a private company to pay for its shares by instalments.
Regulation 4 permits private companies to use cash without having to identify it as distributable reserves to finance the buyback of its own shares, up to the value of £15,000 or 5% of the share capital of the company in each financial year.
Regulation 5 changes the requirements for shareholder authorisations concerning contracts for share buyback to be passed; instead of the authorisation being given by special resolution (a majority of 75% of shareholders), it may be given by ordinary resolution (being a simple majority, i.e. over 50% of shareholders).
Regulations 6 to 9 amend the Companies Act 2006 to allow a company to make off-market purchases of its own shares without having each buyback contract approved by shareholder resolution, as long as the company has a resolution from the shareholders authorising this.
Regulations 10 to 13 amend the requirements that a company must fulfil when buying back its own shares using capital in cases where the buy back is for the purposes of or pursuant to an employees' share scheme. The amendments reduce the requirement to a statement by the directors that the company is solvent and a special resolution by the shareholders.
Regulations 14 and 15 allow a company limited by shares to hold its own shares in treasury and to deal with such shares as treasury shares. The change also allows shares bought back with cash to be held as treasury shares.
A full regulatory impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available from the Business Environment Directorate, Department for Business, Innovation and Skills, 1 Victoria Street, London SW1H 0ET or from www.gov.uk/bis and is annexed to the Explanatory Memorandum which is available alongside the instrument at www.legislation.gov.uk.
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