As part of deputy prime minister Nick Clegg’s “John Lewis economy” project, last autumn the UK Government consulted on changes to the share buy-back legislation to enable companies more easily to increase employee ownership. View the BIS report on these changes.

As a result, regulations have now come into force that will amend the Companies Act 2006 so as to:

  • Reduce the authorisation required for off-market share buy-backs from a special to an ordinary resolution;
  • Allow, in connection with an employee share scheme, multiple buy-backs to be authorised by a single ordinary resolution and private companies to:
    • pay for a buy-back in instalments; and
    • finance a buy-back from capital, subject to a solvency statement and a special resolution; and
  • Allow private companies to:
    • buy back shares for cash (limited to the lower of £15,000 or a sum equivalent to 5% of share capital per year), which does not need to be distributable reserves; and
    • hold and use treasury shares.

Doubtless the Government would like to think that these provisions will also help in encouraging employers to use employee shareholder status!