Treasury shares: an opportunity for private equity?

The regime for the buyback of own shares changed on 30 April 2013 with the coming into force of the Companies Act 2006 (Amendment of Part 18) Regulations 2013.  The changes could provide a warehousing opportunity for private equity-backed companies.

We have described the changes to the buy-back regime in more detail elsewhere. For the purposes of this article, there are two aspects of the new regime we would like to highlight.

Private companies will be able to buy back shares using small amounts of cash (not exceeding the lower of £15,000 or the cash equivalent of five per cent of share capital in any financial year), which do not have to be specifically identified as being distributable reserves, so long as the articles of association expressly provide for this…

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