• Authority For Market Purchase

    • 641. Authority for market purchase

      (1) A company may only make a market purchase of its own shares if the purchase has first been authorised by a resolution of the company.
      (2) That authority-
      (a) may be general or limited to the purchase of shares of a particular class or description, and
      (b) may be unconditional or subject to conditions.
      (3) The authority must-
      (a) specify the maximum number of shares authorised to be acquired, and
      (b) determine both the maximum and minimum prices that may be paid for the shares.
      (4) The authority may be varied, revoked or from time to time renewed by a resolution of the company.
      (5) A resolution conferring, varying or renewing authority must specify a date on which it is to expire, which must not be later than five years after the date on which the resolution is passed.
      (6) A company may make a purchase of its own shares after the expiry of the time limit specified if-
      (a) the contract of purchase was concluded before the authority expired, and
      (b) the terms of the authority permitted the company to make a contract of purchase that would or might be executed wholly or partly after its expiration.
      (7) A resolution to confer or vary authority under this section may determine either or both the maximum and minimum price for purchase by-
      (a) specifying a particular sum, or
      (b) providing a basis or formula for calculating the amount of the price (but without reference to any person’s discretion or opinion).
      (8) Chapter 3 of Part 3 (resolutions affecting a company’s constitution) applies to a resolution under this section.

    • 642. Copy of contract or memorandum to be available for inspection

      (1) This section applies where a company has entered into-
      (a) a contract approved under section 634 (authority for contract for offmarket purchase), or
      (b) a contract for a purchase authorised under section 641 (authorisation of market purchase).
      (2) The company must keep available for inspection-
      (a) a copy of the contract, or
      (b) if the contract is not in writing, a written memorandum setting out its terms.
      (3) The copy or memorandum must be kept available for inspection from the conclusion of the contract until the end of the period of ten years beginning with-
      (a) the date on which the purchase of all the shares in pursuance of the contract is completed, or
      (b) the date on which the contract otherwise determines.
      (4) The copy or memorandum must be kept available for inspection-
      (a) at the company’s registered office, or
      (b) at a place specified in rules made by the Board under section 996 (rules about where certain company records to be kept available for inspection).
      (5) The company must give notice to the Registrar-
      (a) of the place at which the copy or memorandum is kept available for inspection, and
      (b) of any change in that place,
      unless it has at all times been kept at the company’s registered office, or unless it is a restricted scope company.
      (6) Every copy or memorandum required to be kept under this section must be kept open to inspection without charge-
      (a) by any member of the company, and
      (b) in the case of a public company, by any other person.
      (7) The provisions of this section apply to a variation of a contract as they apply to the original contract.

    • 643. Enforcement of right to inspect copy or memorandum

      (1) If default is made in complying with section 642(2), (3) or (4) or default is made for 14 days in complying with section 642(5), or an inspection required under section 642(6) is refused, a contravention of these Regulations is committed by-
      (a) the company, and
      (b) every officer of the company who is in default.
      (2) A person who commits a contravention under this section is liable to a level 2 fine.
      (3) In the case of refusal of an inspection required under section 642(6) the Court may by order compel an immediate inspection.

    • 644. No assignment of company’s right to purchase own shares

      The rights of a company under a contract authorised under-
      (a) section 633 (authority for off-market purchase for the purposes of or pursuant to an employees’ share scheme),
      (b) section 634 (authority for off-market purchase), or
      (c) section 641 (authority for market purchase)
      are not capable of being assigned.

    • 645. Payments apart from purchase price to be made out of distributable profits

      (1) A payment made by a company in consideration of-
      (a) acquiring any right with respect to the purchase of its own shares in pursuance of a contingent purchase contract approved under section 634 (authority for off-market purchase),
      (b) the variation of any contract approved under that section, or
      (c) the release of any of the company’s obligations with respect to the purchase of any of its own shares under a contract-
      (i) approved under section 634 (authority for off-market purchase), or
      (ii) authorised under section 641 (authority for market purchase),
      must be made out of the company’s distributable profits.
      (2) If this requirement is not met in relation to a contract, then-
      (a) in a case within subsection 645(1)(a), no purchase by the company of its own shares in pursuance of that contract may be made under this Chapter,
      (b) in a case within subsection 645(1)(b), no such purchase following the variation may be made under this Chapter,
      (c) in a case within subsection 645(1)(c), the purported release is void.

    • 646. Treatment of shares purchased

      Where a limited company makes a purchase of its own shares in accordance with this Chapter, then-
      (a) if section 666(treasury shares) applies, the shares may be held and dealt with in accordance with Chapter 6,
      (b) if that section does not apply-
      (i) the shares are treated as cancelled, and
      (ii) the amount of the company’s issued share capital is diminished accordingly by the issue price of the shares cancelled.

    • 647. Return to Registrar of purchase of own shares

      (1) Where a company purchases shares under this Chapter, it must deliver a return to the Registrar within the period of one month beginning with the date on which the shares are delivered to it, but not if it is a restricted scope company in which case this section shall not apply.
      (2) The return must distinguish-
      (a) shares in relation to which section 666 (treasury shares) applies and shares in relation to which that section does not apply, and
      (b) shares in relation to which that section applies-
      (i) that are cancelled forthwith (under section 670 (cancellation of treasury shares)), and
      (ii) that are not so cancelled.
      (3) The return must state, with respect to shares of each class purchased-
      (a) the number and aggregate price of the shares purchased, and
      (b) the date on which they were delivered to the company.
      (4) In the case of a public company the return must also state-
      (a) the aggregate amount paid by the company for the shares, and
      (b) the maximum and minimum prices paid in respect of shares of each class purchased.
      (5) Particulars of shares delivered to the company on different dates and under different contracts may be included in a single return.
      In such a case the amount required to be stated under subsection 647(4)(a) is the aggregate amount paid by the company for all the shares to which the return relates.
      (6) If default is made in complying with this section a contravention of these Regulations is committed by every officer of the company who is in default.
      (7) A person who commits a contravention under this section is liable to a level 1 fine.

    • 648. Notice to Registrar of cancellation of shares

      (1) If on the purchase by a company of any of its own shares in accordance with this Part-
      (a) section 666 (treasury shares) does not apply (so that the shares are treated as cancelled), or
      (b) that section applies but the shares are cancelled forthwith (under section 670 (cancellation of treasury shares)),
      the company must give notice of cancellation to the Registrar within the period of one month beginning with the date on which the shares are delivered to it specifying the shares cancelled
      (2) The notice must be accompanied by a statement of capital.
      (3) The statement of capital must state with respect to the company’s share capital immediately following the cancellation-
      (a) the total number of shares of the company,
      (b) the aggregate issue price of those shares,
      (c) for each class of shares-
      (i) prescribed particulars of the rights attached to the shares,
      (ii) the total number of shares of that class, and
      (iii) the aggregate issue price of shares of that class, and
      (d) the amount paid up and the amount (if any) unpaid on each share.
      (4) If default is made in complying with this section, a contravention of these Regulations is committed by-
      (a) the company, and
      (b) every officer of the company who is in default.
      (5) A person who commits a contravention of this section is liable to a level 1 fine.
      (6) This section does not apply to restricted scope companies.