Own Share Purchase Out Of Profits/New Share Issue/Cash – Board Minutes & Board Resolutions
These Own Share Purchase Out of Profits/New Share Issue/Cash – Board Minutes and Resolutions are the first step in the process for a private company wishing to purchase its own shares using distributable profits, the proceeds of a new issue of shares or cash (which may be used in limited circumstances).
This template records the board meeting and resolutions included in the meeting proposing the share buyback, producing the draft Contract To Purchase and draft approval resolution, and the resolutions recommending the buyback and instructing the availability of the contract for inspection (by the vendors).
They should be read in conjunction with Share Buyback Out of Profits Guidance Notes.
Strict Legal Procedure
Share buybacks must follow a strict legal procedure. These Board Minutes and Resolutions reflect the April 2013 changes to the Companies Act 2006, including the move from special resolution to ordinary resolution for approval of the purchase, the option to use cash (in limited circumstances) and the ability to hold shares in treasury. They also take into account the minor amendments made to the April 2013 regulations by The Companies Act 2006 (Amendment of Part 18) Regulations 2015 which came into force on 6th April 2015. In addition, they have been updated following the July 2021 introduction by HMRC of mandatory electronic stamp duty processes to replace their previous physical stamping system. are part of a complete set of templates all of which are drafted by experienced corporate lawyers that follow the requisite procedure.
How to Use these Share Buyback out of Profits Board Minutes and Resolutions?
This template is fully editable and in open format. The document contains fields which must be completed. It also contains wording options in square brackets which must be adjusted to suit your purposes. If the company has only one director, then paragraphs 1 to 3 and paragraph 10 can be deleted together with references to "the chairman". Similarly, any references to the "Company Secretary" should be deleted if the company does not have one and the field should be completed with the name of the director responsible for secretarial duties.
Paragraphs 4, 5 (a), 5 (b), and 6 (a) should be amended by choosing whether the share purchase will be out of distributable profits, a new share issue or cash and deleting the inapplicable options. The option used must be consistent throughout the other documents, in particular the wording of either "Own Share Purchase Out of Profits/New Share Issue/Cash – Written Resolution" or "Own Share Purchase Out of Profits/New Share Issue/Cash – Minutes" which will be used if the shareholders’ resolution is to be passed as a written resolution or in a general meeting of the shareholders respectively.
If the purchase is to be made out of the proceeds of a new issue of shares, then paragraph 8 should be retained and the fields completed.
Paragraphs 5 (b), 6 (b), 7(a), 7 (b) and 8 (if applicable) should be amended depending on whether a written resolution or a general meeting is to be used to pass the resolution and they must be consistent with each other.
What other Templates are required for this Share Buyback Procedure?
These Board Minutes and Resolutions are Step 1 of the process.
Step 2: Contract To Purchase – Written contract Share Buyback Contract (or memorandum of terms) made available to members.
Step 3: Shareholder Approval – Ordinary resolution required; voting restrictions for the selling shareholder by either General Meeting Minutes or Written Shareholder Resolution.
Step 4: Post-approval – Send copies of certain resolutions to Companies House using Share Buyback Letter.
Step 5: Statutory Forms & Stamp Duty
- File SH03 (return of purchase of own shares) within 28 days.
- Pay stamp duty (0.5% over £1,000).
- File SH06 if shares are cancelled.
Step 6: After Completion – Keep Contract To Purchase for 10 years, update share capital, adjust capital redemption reserve if needed.
Different versions of these templates are also available for Employee Share Schemes (ESS).
Own Share Purchase Out Of Profits/New Share Issue/Cash – Board Minutes & Board Resolutions is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.