Buyback and Redemption of Company Share Capital is Complex, and Requires Expert Advice and Due Diligence
Mature companies sometimes decide to buyback or redeem their paid-up capital after some years in the business for several reasons:
- The company is now very established and does not require a high paid-up capital for show of strength to creditors
- As the company is in a strong financial position, to distribute extra capital permanently back to the shareholders
- To repay or compensate shareholders who want to exit the company
- To pay up on dividends, or release available funds for other activities
- To reduce the equity exposure of the company
CorporateRoom is able to advise, document and execute on the steps to assist with buyback and reduction of paid-up capital. These steps include:
- Compliance with Section 78A of the Companies Act
- Check for requirement for creditors approval
- Ensure compliance with solvency tests, publicity requirements and updated ACRA guidelines
- Preparation of documents for the relevant authority’s approval
- Ensure compliance with waiting periods and court order approvals