Buy-back of employee shares simplified

The process of buying back shares from employees on termination of employment has been made more straightforward for an employer under new regulations which came into force on 30th April 2013.

These include:

  • allowing a private limited company to pay for its shares by instalments;
  • allowing a private limited company to buy back its own shares using cash (where it is authorised to do so by its articles of association) up to certain limits;
  • allowing off-market share buybacks to be authorised by ordinary resolution;
  • allow a company to make multiple off-market purchases of its own shares where such off-market purchases have been approved by a single ordinary resolution;
  • setting out the requirements under which a company may finance a share buyback out of capital; and
  • allowing a company limited by shares to hold its own shares in treasury and to deal with such shares as treasury shares (including any shares bought back with cash).

The issue of share buybacks has additional significance because of legislation due to come into force later this year which will allow employees to contract out of certain employment rights in exchange for shares in the employer company.

Please contact our Company & Commercial team for further advice or information at