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Director retirement & company buyback

07 September 2021 | Karen Davies

Company buyback is when a company buys back its own shares from a shareholder to reduce the number of shares in the company. The bought back shares are then usually cancelled. Shares can be bought back either out of distributable profits or capital.

Director exit & company buyback

Alex, and a friend of his, Ben, set up a Company ten years ago. They were both directors with equal 50% shareholdings in the Company. Unfortunately, due to health reasons, Ben decided that it was time to exit the business and retire earlier than expected.

The purchase price had already been negotiated and agreed at £150,000. It had been decided that the Company would buy back the shares from Ben, leaving Alex as the sole director and shareholder of the Company.

GL Law worked with the Company accountants to confirm that there were sufficient profits in the Company to facilitate the buy back.

Once this was established, our Corporate and Employment team were able to prepare the draft documents for the Company and Ben to review which consisted of:

  • A Buyback Agreement;
  • Employment Settlement Agreement;
  • Company board minutes and shareholder written resolution; and
  • Companies House documents.

 

This case was handled by the Corporate and Employment team to ensure that Ben’s position as director, employee and shareholder were dealt with.

Specialist legal advice for directors & shareholders

If you would like to discuss your situation with one of our expert business lawyers, please call 0117 906 9400 or email hello@gl.law 

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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