In addition to the provisions of CA 2006, there are other rules and guidelines that are relevant to a publicly traded company or an AIM company. In particular, a listed company must take into account listing rules (LRs) and advertising and transparency guidelines (DtR). An AIM company must comply with the AIM rules applicable to companies, but these do not specifically concern share repurchases, so the AIM Regulation confirmed that compliance with LRs by an AIM company with respect to share repurchases would, in most cases, be a good practice. An AIM company is also subject to DTR 5. In addition, both types of companies can follow the guidelines of institutional investors. However, as of April 30, 2013, approval may be granted by an ordinary resolution. An ordinary decision requires only a simple majority, i.e. more than 50% of the shareholders. In addition, there are specific rules for share repurchases with respect to employee shareholding systems, which allow for further relaxation of normal rules (CA 2006, s 693A). A share buyback is a transaction between an existing shareholder and a company. As noted above, a number of amendments to the Share Repurchase Act were introduced, effective April 30, 2013, by the Companies Act 2006 (amendment of Part 18) Regulations 2013, SI 2013/999. A limited company may repurchase shares as such if certain conditions of the Companies Act 2006 (CA 2006) are met.
This is called share buybacks or the purchase of shares. Prior to the High Court, it was found that the share buyback was nil. The company had sufficient distribution reserves for the share buyback. However, corporate law also required that, when a company acquired its own shares, the terms of the contract be provided for payment once completed. In this case, part of the consideration was paid in increments, which is contrary to corporate law. However, the Court also ruled that the liquidator could not recover payments from Mr. Crimmins` shares. This situation is due to two "important and unusual characteristics" in this case. First, if they had been aware of the requirements of corporate law, the parties could have changed the terms of the agreement so that the company paid the full totality of the shares after the conclusion.
Second, Mr. Crimmin had waived his shareholder and director rights on the grounds that the share buyback was valid. If he had understood that the money was refundable, Mr. Crimmin would have wanted to think about how to protect his interest in the business.