Part 18Acquisition by limited company of its own shares
Chapter 4Purchase of own shares
Authority for off-market purchase
694Authority for off-market purchase
1
A company may only make an off-market purchase of its own shares in pursuance of a contract approved prior to the purchase in accordance with this section.
2
Either—
a
the terms of the contract must be authorised by a special resolution of the company before the contract is entered into, or
b
the contract must provide that no shares may be purchased in pursuance of the contract until its terms have been authorised by a special resolution of the company.
3
The contract may be a contract, entered into by the company and relating to shares in the company, that does not amount to a contract to purchase the shares but under which the company may (subject to any conditions) become entitled or obliged to purchase the shares.
4
The authority conferred by a resolution under this section may be varied, revoked or from time to time renewed by a special resolution of the company.
5
In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed.
6
A resolution conferring, varying, revoking or renewing authority under this section is subject to—
section 695 (exercise of voting rights), and
section 696 (disclosure of details of contract).
695Resolution authorising off-market purchase: exercise of voting rights
1
This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section 694 (authority for off-market purchase of own shares).
2
Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member.
3
Where the resolution is proposed at a meeting of the company, it is not effective if—
a
any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and
b
the resolution would not have been passed if he had not done so.
4
For this purpose—
a
a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;
b
any member of the company may demand a poll on that question;
c
a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.
696Resolution authorising off-market purchase: disclosure of details of contract
1
This section applies in relation to a resolution to confer, vary, revoke or renew authority for the purposes of section 694 (authority for off-market purchase of own shares).
2
A copy of the contract (if it is in writing) or a memorandum setting out its terms (if it is not) must be made available to members—
a
in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him;
b
in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
i
at the company’s registered office for not less than 15 days ending with the date of the meeting, and
ii
at the meeting itself.
3
A memorandum of contract terms so made available must include the names of the members holding shares to which the contract relates.
4
A copy of the contract so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the contract itself.
5
The resolution is not validly passed if the requirements of this section are not complied with
697Variation of contract for off-market purchase
1
A company may only agree to a variation of a contract authorised under section 694 (authority for off-market purchase) if the variation is approved in advance in accordance with this section.
2
The terms of the variation must be authorised by a special resolution of the company before it is agreed to.
3
That authority may be varied, revoked or from time to time renewed by a special resolution of the company.
4
In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed.
5
A resolution conferring, varying, revoking or renewing authority under this section is subject to—
section 698 (exercise of voting rights), and
section 699 (disclosure of details of variation).
698Resolution authorising variation: exercise of voting rights
1
This section applies to a resolution to confer, vary, revoke or renew authority for the purposes of section 697 (variation of contract for off-market purchase of own shares).
2
Where the resolution is proposed as a written resolution, a member who holds shares to which the resolution relates is not an eligible member.
3
Where the resolution is proposed at a meeting of the company, it is not effective if—
a
any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution, and
b
the resolution would not have been passed if he had not done so.
4
For this purpose—
a
a member who holds shares to which the resolution relates is regarded as exercising the voting rights carried by those shares not only if he votes in respect of them on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;
b
any member of the company may demand a poll on that question;
c
a vote and a demand for a poll by a person as proxy for a member are the same respectively as a vote and a demand by the member.
699Resolution authorising variation: disclosure of details of variation
1
This section applies in relation to a resolution under section 697 (variation of contract for off-market purchase of own shares).
2
A copy of the proposed variation (if it is in writing) or a written memorandum giving details of the proposed variation (if it is not) must be made available to members—
a
in the case of a written resolution, by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him;
b
in the case of a resolution at a meeting, by being made available for inspection by members of the company both—
i
at the company’s registered office for not less than 15 days ending with the date of the meeting, and
ii
at the meeting itself.
3
There must also be made available as mentioned in subsection (2) a copy of the original contract or, as the case may be, a memorandum of its terms, together with any variations previously made.
4
A memorandum of the proposed variation so made available must include the names of the members holding shares to which the variation relates.
5
A copy of the proposed variation so made available must have annexed to it a written memorandum specifying such of those names as do not appear in the variation itself.
6
The resolution is not validly passed if the requirements of this section are not complied with.
700Release of company’s rights under contract for off-market purchase
1
An agreement by a company to release its rights under a contract approved under section 694 (authorisation of off-market purchase) is void unless the terms of the release agreement are approved in advance in accordance with this section.
2
The terms of the proposed agreement must be authorised by a special resolution of the company before the agreement is entered into.
3
That authority may be varied, revoked or from time to time renewed by a special resolution of the company.
4
In the case of a public company a resolution conferring, varying or renewing authority must specify a date on which the authority is to expire, which must not be later than 18 months after the date on which the resolution is passed.
5
The provisions of—
section 698 (exercise of voting rights), and
section 699 (disclosure of details of variation),
apply to a resolution authorising a proposed release agreement as they apply to a resolution authorising a proposed variation.