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Share Buybacks

Share Buybacks Solicitors in London and Essex

A share buyback is often (but not always) used during shareholder exits and is an effective way to extract cash from the company to realise the value of the shareholding or alternatively to return excess cash to a shareholder. 

Share buyback transactions can be highly tax-efficient but must comply with the strict provisions of Part 18 of the Companies Act 2006. Any breach of such provisions will result in the transaction being void which means it will be treated as it never happened i.e., the seller will be treated as if they continue to own the shares and the payment for the shares is liable to be returned to the company (which the company might find it difficult to recover). In addition, every officer of the company will commit a criminal offence. In other words, getting things wrong can have serious adverse legal and tax implications. 

Well-advised clients will benefit from lawyers who can structure their transactions in a legally compliant and effective way. We frequently find defects in the way in which share buyback transactions are structured e.g.:

  • Deferred payments: it is generally unlawful to fund a share buyback in deferred or instalment payments (including leaving the balance outstanding on loan account).
  • Distributable profits but no cash (or vice versa): share buybacks are commonly funded out of a company’s distributable profits, but profit does not automatically mean that enough cash is available to fund the payment for the shares. Similarly, having cash in the bank does not automatically mean that enough profits are available to complete the share buyback transaction.
  • Breach of company’s articles of association: any restrictions or limitations in a company’s articles of association must be identified and addressed as part of the transaction documentation.

Whether you have made the decision to leave your business after many years or are looking to return surplus cash to the company’s shareholders, we offer specialist advice and representation which is tailored to your business needs.

Our unique selling point is that we understand what clients want from their lawyers. We will manage your transaction proactively, with careful attention to detail while never losing sight of the bigger picture.

While working with us you will have access to our strong network of other professionals such as accountants, independent financial advisers and bankers.

We offer a range of pricing options and will be happy to discuss these with you. As a client-centred law firm, we will be transparent with you about our pricing and actively manage these in line with our agreements.


How we can help with Share Buybacks matters

We will give you expert advice and representation from the start-to-finish of your matter, while making sure that you understand the various stages along the way.

We can guide you through matters including:

  • Advising on the best way to structure your share buyback from a legal perspective. We will work with your other advisors, such as accountants, to ensure that the structure works from other perspectives (such as tax).
  • Reviewing the company’s articles and any shareholders’ agreement before dealing with the share buyback.
  • Drafting and negotiating the share buyback agreement and other ancillary documentation ensuring that you receive specialist advice in a cost-efficient way.
  • Project managing your transaction, based on industry practice, to make sure that all relevant tasks are completed properly and allowing you to focus on day-to-day business matters in the knowledge that your advisers are protecting your interests.
  • Dealing with the post-completion matters such as the payment of Stamp Duty to HM Revenue and Customs (if applicable) and filing of Companies House forms.


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