Search Legislation

The Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009

 Help about what version

What Version

  • Latest available (Revised)
  • Original (As made)
 Help about opening options

Opening Options

Status:

This is the original version (as it was originally made). This item of legislation is currently only available in its original format.

Statutory Instruments

2009 No. 2022

Companies

The Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009

Made

21st July 2009

Coming into force

1st October 2009

The Secretary of State makes the following Regulations in exercise of the powers conferred by sections 562(6)(a), 657, 737 and 1292(1)(c) of the Companies Act 2006(1).

In accordance with sections 562(7), 657(4), 737(4) and 1290 of that Act, a draft of these Regulations has been laid before Parliament and approved by a resolution of each House of Parliament.

Citation and commencement

1.—(1) These Regulations may be cited as the Companies (Share Capital and Acquisition by Company of its Own Shares) Regulations 2009.

(2) They come into force on 1st October 2009.

Rights issues

2.  In section 562(5) of the Companies Act 2006 (communication of pre-emption offers to shareholders: minimum period during which offer may be accepted) for “21 days” substitute “14 days”.

Reduction of capital: creditor protection

3.  In section 646(1) of the Companies Act 2006 (application to court for order confirming reduction of share capital: creditors entitled to object)—

(a)after “who” insert “— (a)”, and

(b)after “admissible in proof against the company” insert—

, and

(b)can show that there is a real likelihood that the reduction would result in the company being unable to discharge his debt or claim when it fell due,.

Acquisition by company of its own shares

4.—(1) In each of sections 694(5), 697(4) and 700(4) of the Companies Act 2006 (authority for off-market purchase, variation of contract for off-market purchase and release of off-market purchase rights: public companies) for “18 months” substitute “five years”.

(2) In section 701(5) of the Companies Act 2006 (authority for market purchase) for “18 months” substitute “five years”.

Treasury shares

5.—(1) Section 725 of the Companies Act 2006 (treasury shares: maximum holdings) is repealed.

(2) Any outstanding obligation to dispose of or cancel excess shares arising under section 725(3) of that Act (duty to dispose of excess shares) shall cease to exist on 1st October 2009, whether or not the period mentioned in that provision has expired, but this is subject to paragraph (3).

(3) This amendment does not affect any liability under section 732 of that Act (treasury shares: offences) in respect of a failure to comply with section 725(3) where the period mentioned in that provision expired before 1st October 2009.

Ian Lucas

Minister for Business and Regulatory Reform,

Department for Business, Innovation and Skills

21st July 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

Regulation 2 of these Regulations amends section 562 of the Companies Act 2006 so that the minimum period for which rights issues must be kept open for acceptance is reduced from 21 days to 14 days.

Regulation 3 implements in respect of the Companies Act 2006 the amendment made to Article 32(1) of Council Directive 77/91/EEC (OJ L 26, 31.1.1977, p. 1) by Directive 2006/68/EC of the European Parliament and of the Council (OJ L 264, 25.9.2006, p. 32) (that Directive was implemented in respect of the Companies Act 1985 by the Companies (Reduction of Capital) (Creditor Protection) Regulations 2008 (S.I. 2008/719)). The latter Directive amended the former as regards the formation of public companies and the maintenance and alteration of their capital. Regulation 3 also makes corresponding amendments to the law as it relates to private companies.

Regulation 3 amends section 646 of the Companies Act 2006. Under section 645 a company may reduce its share capital by special resolution subject to confirmation by the court. Section 646 provides a procedure for identifying and producing a list of creditors entitled to object to a proposed capital reduction. Under section 648, before the court may confirm a reduction it must be satisfied that the consent of the listed creditors has been obtained or their claims have been discharged or have determined or have been secured by the company. Regulation 3 amends section 646 to exclude from the list of creditors those who cannot show that there is a real likelihood that the proposed capital reduction would result in the company being unable to discharge their debts or claims when they fell due.

Regulation 4(1) increases from 18 months to five years the amount of time for which a public company may be authorised by special resolution of its members to make off-market purchases of its own shares, vary a contract for off-market purchase of its own shares or release its rights under a contract for off-market purchase of its own shares. Regulation 4(2) increases from 18 months to five years the amount of time for which a public or private company may be authorised by ordinary resolution of its members to make market purchases of its own shares.

Regulation 5 removes from companies the restriction that the maximum amount of their own shares which they may hold as treasury shares is limited to 10% of the nominal value of their issued share capital (or of the class of issued share capital in question). This regulation is subject to transitional provisions.

A transposition note has been prepared which sets out how Directive 2006/68/EC is to be transposed into United Kingdom law. Impact assessments of the effect that this instrument will have on the costs of business and the voluntary sector have been produced and are annexed to the Explanatory Memorandum which is available alongside the instrument on the OPSI website. The transposition note and the impact assessments are both available from the Department for Business, Innovation and Skills, Corporate Law and Governance Directorate 1 Victoria St, London SW1H 0ET or at http://www.bis.gov.uk.

Back to top

Options/Help

Print Options

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

Explanatory Memorandum

Explanatory Memorandum sets out a brief statement of the purpose of a Statutory Instrument and provides information about its policy objective and policy implications. They aim to make the Statutory Instrument accessible to readers who are not legally qualified and accompany any Statutory Instrument or Draft Statutory Instrument laid before Parliament from June 2004 onwards.

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as made version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources