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Marches Leisure (The Shrewsbury Club) and Holmer Park Spa and Health Club (Herefordshire)
Corporate and commercial legal advice regarding business acquisitions....
Company Share Buyback: Purchase of Own Shares.
A popular method allowing shareholders to exit a company and sell their shares is via a share buyback.
This is where a company purchases its own shares from the shareholder.
If you are considering carrying out a share buyback, it is important to get the correct legal advice. Lanyon Bowdler has an experienced team of expert Business Lawyers who have dealt with a substantial number of share buybacks and are in the best position to help you through the process to reach a satisfactory conclusion.
As part of our legal advice, we will explain how a share buyback works and how it is funded in clear, easy to understand language. We will also implement the buyback and file all necessary documents with the relevant authorities, whilst keeping you fully informed at every stage.
To ensure that the positions of both the company and the selling shareholder are protected, we work closely with accountants and tax advisers to ensure proper financial advice is obtained.
How Can I Buy Back Shares?
The Companies Act 2006 sets out the procedure that must be followed to give effect to a share buyback. If the prescribed procedure is not adhered to, the buyback is at risk of being invalid and the officers of the company commit an offence.
Some of the criteria to be met under this procedure are:
- The transaction must be permitted under the company’s Articles of Association
- Shares have to be fully paid
- The transaction must be documented (document to be available for inspection)
- The shares must be paid for at the time of purchase (payment cannot be deferred)
- The transaction must be approved by a resolution of the eligible shareholders (the individual selling their shares to the company is not eligible for the purposes of voting)
There are a number of ways in which a company can fund a share buyback. The most straightforward is to use distributable profits – these are accumulated, realised profits minus losses.
If the company does not have enough distributable profits to fund the buyback in full, the company may use capital. Funding a share buyback in this way reduces capital, meaning that the company is at greater risk of insolvency, which could potentially prejudice its creditors. Therefore the procedure under the Companies Act 2006 is more onerous when using this method.
In the case of buybacks out of capital, the directors of the company must state the company is solvent and will be for the next year. This must be supported by a copy of the auditor’s report. If the statement proves to be untrue and the company goes into liquidation with 12 months, the directors of the company may be subject to legal proceedings and could be made to contribute to the financial losses.
Our Share Buyback Expertise
The Legal 500 Recommendations
The 2024 edition of The Legal 500 states that “underpinned by strong cross-office collaboration, Lanyon Bowdler’s ‘knowledge, advice, and expertise’ makes them a key port of call for a host of corporate clients. Shrewsbury-based Gráinne Walters is an ‘excellent’ adviser whose wide-ranging client base spans the consumer goods, education, care, and industrials sectors, to name a few. ‘Highly experienced and extremely knowledgeable’, Ludlow-based Edward Burrell’s recent workload includes both M&A and restructuring mandates, while Conwy-based Jennifer Edwards is noted for her significant experience in asset sales.”
Chambers UK 2024
The 2024 edition of Chambers UK recognised the team, saying: “Lanyon Bowdler offers expertise in a wide range of legal services. It has vast knowledge of such areas as acquisitions, sales, mergers, management buyouts and buy-ins, investments, reorganisations, and commercial contracts, among many others. The department has noted skills in sectors such as agriculture, education and renewable energy supply.” One client enthuses: “Their work is thorough and the key matters are understood in detail.” Other sources say “Outstanding levels of client service from the partner level down.” and “Lanyon Bowdler are diligent, knowledgeable and take a professional approach to providing advice.”
Testimonials
What our clients say.
Since dealing with Lanyon Bowdler they have been diligent, efficient and at all times very helpful along with being structured in dealing with matters, fees and clarity on all levels. Thank you.
Michael
via ReviewSolicitors
I was clearly informed of progress step by step. The service you provided was very good.
Peter Weston
Shrewsbury
All work carried out effectively and efficiently.
Hubert Jones
via ReviewSolicitors
Smooth and efficient service from very professional firm.
Tim
via ReviewSolicitors
An excellent service with solicitors that you can talk to and who give you a clear understanding of all necessary legal implications and interpretations.
Eric
via ReviewSolicitors
From start to finish we had excellent service. Friendly, approachable and professional.
Carl Gittins
via ReviewSolicitors
Very clear, concise advice and guidance, easy to understand.
Ian Jamieson
Telford
Good service provided throughout with clear communication throughout with all options explored.
Lee
I can thoroughly recommend the highly professional and supportive service received over the last few months.
Heather
via ReviewSolicitors
Responsive, supportive, approachable, clear and empathetic.
Lisa Thacker
Professional and prompt communication. Supportive and client focused.
Lisa Thacker
Jennifer M Whittall Ltd
Whenever I have had need to contact Lanyon Bowdler I have always received a fast, concise and friendly response.
Lee Mortimer
UK Case Management
Definitely would use Lanyon Bowdler again if I need the use of a solicitor.
Mark Bowkett
via ReviewSolicitors
Smooth and efficient service from very professional firm.
Tim
via ReviewSolicitors
We were particularly impressed with the quality of work, the speed and excellent communication.
Allenby Douglas Ltd
Oswestry
Very friendly and approachable. Very good advice
Ivor Brown
via ReviewSolicitors
Great Service; Lanyon Bowdler were excellent from the outset. Straightforward and easy process. I just sat back and waited.
Paul Rowe
via ReviewSolicitors
Thank you for all your help in achieving the sale of our business and enabling us to at last retire.
Robert Walton
Telford
Everything has been professional, efficient and courteous throughout and we are very pleased, both with the service and with the eventual outcome of our case. Everything was first class and exceeded our expectations. Thank you again for providing such splendid service. It is really appreciated.
Mr N J & Dr S J Browne
Llanfyllin
Contact Lanyon Bowdler
We have offices in Shrewsbury, Telford, Oswestry, Ludlow, Hereford, Bromyard and Conwy, where our friendly, knowledgeable staff will be happy to welcome you for an initial chat about your requirements. We work with businesses across Shropshire, Cheshire, Herefordshire, The Marches, Mid & North Wales, Birmingham, and the Midlands. As a leading corporate law firm with specific expertise in company share repurchase procedures, we can advise and represent your interests wherever you are in England or Wales.
For more information about how Lanyon Bowdler can help you with a share buyback please use the online contact form and someone will get back to you.
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