Share Buy Back
Share Buy Back
The ability for a company to easily buy back shares it had previously issued was introduced in December, 1995. As from this date, it was no longer necessary to undergo complex procedures or to re-draft the Memorandum and Articles of Association of the Company. A company is permitted to buy back any type of share other than redeemable preference shares.
For an unlisted company, a buy back is generally either:
Selective - whereby the treatment of shareholders differs; or
Equal access - whereby all shareholders participate equally in the buy back scheme.
An overview of the procedure adopted for a share buy-back is as follows:-
1. Directors meet to convene a general meeting at which the resolution approving the share buy back is put.
2. Secretary to issue notices of the General Meeting to all Shareholders. Attached to that notice must be the wording of the proposed resolution and all matters which the Company believes would be relevant to adequately inform the shareholders prior to asking them to decide upon the resolution. Included in these attachments must be a copy of the proposed Share Sale Agreement between the Company and those shareholders involved in the Share Buy Back.
3. The ASIC is to receive a copy of the notice of General Meeting together with all papers issued to shareholders, including a copy of the proposed Share Sale Agreement.
4. General Meeting so that the shareholders can decide upon the proposed Share Buy Back.
5. Settlement of the transaction: Share Sale Agreement and Share Transfer Form are executed. In Victoria, no stamp duty is payable on these instruments. If the Company is incorporated in another State, duty may be payable.
6. Notice of transfer and cancellation of shares to be sent to the ASIC. There is a set timetable to follow this with procedure. You are “locked into” observing certain timeframes. All up, the procedure is usually completed within two months.
Please contact the helpful staff at Castle Corporate on 03 9898 6666 for more information.