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60: Board may make offer to acquire shares
or “Company board can offer to buy shares from shareholders”
You could also call this:

“Rules for companies buying back their own shares”

When a company wants to buy back some of its own shares, the board of directors needs to follow some rules. They must first decide that buying the shares will be good for the other shareholders who keep their shares. They also need to make sure that the price and terms of the offer are fair for those shareholders.

The directors have to write down why they think this is a good idea. If they agree, they need to sign a document saying so. But if they change their minds before making the offer, they can’t go ahead with it.

Before making the offer, the company must send each shareholder a document that explains everything about the offer. This document needs to follow the rules set out in section 62. The company then has to wait at least 10 working days, but not more than 12 months, before making the offer.

There’s an exception to these rules for companies listed on the stock market. If they’re buying back only a small number of shares, they don’t need to send out the explanation document.

If a shareholder thinks the offer isn’t good for the company or isn’t fair, they can ask a court to stop it. The company can do this too.

Directors who don’t follow these rules can get in trouble. They might have to pay a fine. The company can also get in trouble if it doesn’t send out the explanation document properly.

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Next up: 62: Disclosure document

or “Document explaining the company's plan to buy its own shares”
Next

Part 6 Shares and debentures
Company may acquire its own shares

61Special offers to acquire shares

  1. The board may make an offer under section 60(1)(b)(ii) only if it has previously resolved—

  2. that the acquisition is of benefit to the remaining shareholders; and
    1. that the terms of the offer and the consideration offered for the shares are fair and reasonable to the remaining shareholders.

      1. The resolution must set out in full the reasons for the directors' conclusions.

      2. The directors who vote in favour of a resolution required by subsection (1) must sign a certificate as to the matters set out in that subsection.

      3. A board must not make an offer under section 60(1)(b)(ii) if, after the passing of a resolution under subsection (1) of this section and before the making of the offer to acquire the shares, the board ceases to be satisfied that—

      4. the acquisition is of benefit to the remaining shareholders; or
        1. the terms of the offer and the consideration offered for the shares are fair and reasonable to the remaining shareholders.

          1. Before an offer is made pursuant to a resolution under subsection (1), the company must send to each shareholder a disclosure document that complies with section 62.

          2. The offer must be made not less than 10 working days and not more than 12 months after the disclosure document has been sent to each shareholder.

          3. Nothing in subsections (5) and (6) applies to an offer to a shareholder by a company if—

          4. the company is a listed issuer; and
            1. the offer is to acquire fewer of the quoted shares of the company than the minimum holding of those shares in the company determined by the operator of the relevant licensed market.

              1. A shareholder or the company may apply to the court for an order restraining the proposed acquisition on the grounds that—

              2. it is not in the best interests of the company and of benefit to remaining shareholders; or
                1. the terms of the offer and the consideration offered for the shares are not fair and reasonable to the company and remaining shareholders.

                  1. Every director who fails to comply with subsection (3) commits an offence and is liable on conviction to the penalty set out in section 373(1).

                  2. If a company fails to comply with subsection (5),—

                  3. the company commits an offence and is liable on conviction to the penalty set out in section 373(1); and
                    1. every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1).

                      Notes
                      • Section 61(7): replaced, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).