Share buybacks are a mechanism in which a company uses its own money to purchase a shareholder’s shares.

There are many reasons why a company may want to effect a share buyback, for example, to enable a shareholder to exit the company; to reduce the number of shares in the company thereby increasing the value of each share; or to change the share capital structure.

If you want to carry out a share buyback, the Companies Act 2006 establishes strict rules.

In certain circumstances, the ‘de minimis’ exemption provides an alternative to the regular share buyback mechanism, enabling a company to purchase back a small number of shares without following the more complex procedure. This procedure is only available in limited cases and our experts will advise you on the correct mechanism for you to use.

As well as advising you on the relevant legal requirements, we help you to structure the transaction, ensuring that once the buyback is effected, your company has a share capital that promotes its goals and ambitions. We will also advise on all the documentation needed to carry out your share buyback, including negotiating any relevant terms to ensure that you are adequately protected going forward.

Without a qualified legal expert, understanding the requirements and formalities for a company to buy back its shares from a shareholder can be complex. If you would like to find out whether a share buyback is the right mechanism for you to further your company’s goals, please get in touch to arrange a call with one of our experts.