One of the recommendation of the Nuttall Review of Employee Ownership, published in July 2012, was that the Companies Act 2006 rules on share buy-backs should be simplified, in order to make it easier for private companies to buy back shares from departing employees and to re-distribute them to new joiners or other employees.
The Government has today launched a consultation on this recommendation, as part of a wider response to the Nuttall Review.
The consultation document can be read here. The principal proposals, all of which relate to private companies limited by shares, are that:
• Share buy-backs should be capable of approval by an ordinary resolution of shareholders (as opposed to the existing special resolution).
• Companies should be able to pay for share buy-backs in instalments.
• The number of options for financing share buy-backs should be increased (no further details are given).
• Private companies should be allowed to hold bought-back shares in treasury.
The consultation closes on 16 November 2012 and the Government will publish its response within three months of that date.
UPDATE 19 February 2013: The Government has now announced that it will implement these proposals; see our discussion here.