Part 18Acquisition by limited company of its own shares
Chapter 4Purchase of own shares
General provisions
690Power of limited company to purchase own shares
(1)
A limited company having a share capital may purchase its own shares (including any redeemable shares), subject to—
(a)
the following provisions of this Chapter, and
(b)
any restriction or prohibition in the company’s articles.
(2)
A limited company may not purchase its own shares if as a result of the purchase there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares.
691Payment for purchase of own shares
(1)
A limited company may not purchase its own shares unless they are fully paid.
(2)
Where a limited company purchases its own shares, the shares must be paid for on purchase.
692Financing of purchase of own shares
(1)
A private limited company may purchase its own shares out of capital in accordance with Chapter 5.
(2)
Subject to that—
(a)
a limited company may only purchase its own shares out of—
(i)
distributable profits of the company, or
(ii)
the proceeds of a fresh issue of shares made for the purpose of financing the purchase, and
(b)
any premium payable on the purchase by a limited company of its own shares must be paid out of distributable profits of the company, subject to subsection (3).
(3)
If the shares to be purchased were issued at a premium, any premium payable on their purchase by the company may be paid out of the proceeds of a fresh issue of shares made for the purpose of financing the purchase, up to an amount equal to—
(a)
the aggregate of the premiums received by the company on the issue of the shares purchased, or
(b)
the current amount of the company’s share premium account (including any sum transferred to that account in respect of premiums on the new shares),
whichever is the less.
(4)
The amount of the company’s share premium account is reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made under subsection (3).
(5)
This section has effect subject to section 735(4) (terms of purchase enforceable in a winding up).