Clarification Of Share Buyback Rules

Regulations introduced in 2013 relaxed certain Companies Act 2006 rules that would otherwise apply when a company undertakes a buyback of its shares.

New regulations, which came into force on 6 April 2015, make further changes to clarify some provisions introduced by the 2013 regulations. The new regulations clarify that:

• a private company, if authorised by its articles, can make small buybacks out of capital in a financial year without being subject to payment out of capital rules which usually apply;
• the maximum total price the company can pay under this exemption is the lower of £15,000 and the nominal value of 5 per cent of the company's fully paid share capital at the beginning of the financial year; and