Companies Amendment Bill: Share buy-backs
Section 48(2)(a) of the Companies Act, 2008 (the “Companies Act”) provides that only the board of a company may determine that the company acquire its own shares. Only section 48(8)(a) of the Companies Act prescribed that a shareholders resolution is required in circumstances in which shares are to be acquired by the company from a director, prescribed officer or person related to the director or prescribed officer.
The Bill has now introduced a new section 48(9) which requires a special resolution of the shareholders to be passed if it entails the repurchase of shares other than due to:
a pro rata offer made to all the shareholders of the company or a particular class of shareholders of the company; or
transactions effected in the ordinary course on a recognised stock exchange on which shares of the company are traded.
The effect of section 48(9) is welcomed. It appears as if the rationale behind the new section 48(9) is to simplify the necessity to pass a special resolution when point (1) or (2) above is met. This process will now fast track the repurchase of shares by a company.