Share Buyback Agreements

A share repurchase agreement is used when a company buys back shares from one or more of its shareholders or investors. The buyback is also a tax-efficient way to return money to shareholders. Once shares are repurchased they are considered cancelled, but they can be kept for redistribution in the future. The agreement will have to detail the purchase amount, the purchase method and schedule, as well as any representations or warranties of the buyer and seller to each other. There are a number of tax and legal implications that must be considered when you draft a Share Buyback Agreement, so it is important to ask your legal representative to review the agreement to avoid any possible issues.