Purchase of own shares

Purchase of own shares

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Our company have arranged to purchase some minority shares. All necessary legal documents prepared etc. My question is about the called up and paid share capital. Does a purchase of own shares automatically lead to a reduction of share capital by the nominal amount purchased. CH form SH03 is being sent in after stamping.

My feeling is that it would - but I have no prior experience to base this on,

Thanks.

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Portia profile image
By Portia Nina Levin
23rd Dec 2014 14:00

POOS

Clue: the company purchases the shares, and then the shares purchased are cancelled.

Before that happens, say, there are 100 x £1 shares in issue, after it happens there are, say, 90 x £1 shares in issue.

I think the issued share capital has reduced. I do not think you need prior experience to think so.

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Euan's picture
By Euan MacLennan
23rd Dec 2014 14:11

Not automatically

I agree with Portia that it is not so much the purchase of the shares, but the subsequent cancellation of the shares in accordance with s.706(b) CA 2006 that results in the issued share capital being reduced.

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Routemaster image
By tom123
23rd Dec 2014 14:19

Thanks for the confirmation

Thanks both - everything to me suggested the reduction, including the share cancellation return etc. Just wanted to check rather than proceeding on my own sweet way.

Seasons greetings and all that,

Tom

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