Companies House Form 169

Form 169 Return by a Company Purchasing it own Shares

A company can decide to buy back some of its own shares if it is permitted in the companies Articles of Association. To do this a special resolution must be passed to authorise the purchasing of its own shares.

A special resolution is passed at a general meeting at least 21 days before the date which the company intends to purchase the shares. A 75 % majority is needed for agreement to buy back its own shares. If the resolution is passed then the company can legally purchase them.

However there are certain conditions. For example the company cannot buy them back if doing so would leave only redeemable shares. Redeemable shares are issued with an agreement that the company will buy them back at the option of the company or the shareholder after a certain period.

The terms of the special resolution are also dependant on certain conditions involving the purchase being either a market purchase or an off-market purchase. A market purchase is one that is recognised on the stock exchange and an off-market purchase can only be made when:

• It is done in accordance with the terms of a contract authorised in advance of the purchase by a special resolution, or
• Under the terms of any contingent purchase contract that has been approved in advance by a special resolution

(Source Companies House website)

When a company does purchase its own shares, it is done using the statutory Form 169. The shares are cancelled on their return to the company and the purchase must be notified to Companies House within 28 days.

As the purchase by a company of its own shares is a chargeable transaction, stamp duty has to be paid on the amount of the re-purchase price. So before Form 169 can be sent to the Registrar at Companies House it must be stamped by the Inland Revenue.

See here for example of 169