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LR 12.4 Purchase of own equity shares

Purchases of less than 15%

LR 12.4.1R

Unless a tender offer is made to all holders of the class, purchases by a listed company of less than 15% of any class of its equity shares (excluding treasury shares) pursuant to a general authority granted by shareholders, may only be made if the price to be paid is not more than the higher of:

  1. (1)

    5% above the average market value of the company's equity shares for the 5 business days prior to the day the purchase is made; and

  2. (2)

    that stipulated by article 5(6) of the Market Abuse Regulation4.

Purchases of 15% or more

LR 12.4.2R

Purchases by a listed company of 15% or more of any class of its equity shares (excluding treasury shares) pursuant to a general authority by the shareholders3 must be by way of a tender offer to all shareholders of that class.

LR 12.4.2AR

3Purchases of 15% or more of any class of its own equity shares may be made by a listed company, other than by way of a tender offer, provided that the full terms of the share buyback have been specifically approved by shareholders.

LR 12.4.3G

Where a series of purchases are made pursuant to a general authority granted by shareholders, which in aggregate amount to 15% or more of the number of equity shares of the relevant class in issue immediately following the shareholders meeting at which the general authority to purchase was granted, a tender offer need only be made in respect of any purchase that takes the aggregate to or above that level. Purchases that have been specifically approved by shareholders are not to be taken into account in determining whether the 15% level has been reached.

Notification prior to purchase

LR 12.4.4R
  1. (1)

    Any decision by the board to submit to shareholders a proposal for the listed company to be authorised to purchase its own equity shares must be notified to a RIS as soon as possible.

  2. (2)

    A notification required by paragraph (1) must set out whether the proposal relates to:

    1. (a)

      specific purchases and if so, the names of the persons from whom the purchases are to be made; or

    2. (b)

      a general authorisation to make purchases.

  3. (3)

    The requirement set out in paragraph (1) does not apply to a decision by the board to submit to shareholders a proposal to renew an existing authority to purchase own equity shares.

LR 12.4.5R

A listed company must notify a RIS as soon as possible of the outcome of the shareholders' meeting to decide the proposal described in LR 12.4.4 R.

Notification of purchases

LR 12.4.6R

Any purchase of a listed company's own equity shares by or on behalf of the company or any other member of its group must be notified to a RIS as soon as possible, and in any event by no later than 7:30 a.m. on the business day following the calendar day on which the purchase occurred. The notification must include:

  1. (1)

    the date of purchase;

  2. (2)

    the number of equity shares purchased;

  3. (3)

    the purchase price for each of the highest and lowest price paid, where relevant;

  4. (4)

    the number of equity shares purchased for cancellation and the number of equity shares purchased to be held as treasury shares; and

  5. (5)

    where equity shares were purchased to be held as treasury shares, a statement of:

    1. (a)

      the total number of treasury shares of each class held by the company following the purchase and non-cancellation of such equity shares; and

    2. (b)

      the number of equity shares of each class that the company has in issue less the total number of treasury shares of each class held by the company following the purchase and non-cancellation of such equity shares.

Consent of other classes

LR 12.4.7R

Unless LR 12.4.8 R applies, a company with listed securities convertible into, or exchangeable for, or carrying a right to subscribe for equity shares of the class proposed to be purchased must (prior to entering into any agreement to purchase such shares):

  1. (1)

    convene a separate meeting of the holders of those securities; and

  2. (2)

    obtain their approval for the proposed purchase of equity shares by a special2 resolution.

    2
LR 12.4.8R

LR 12.4.7 R does not apply if the trust deed or terms of issue of the relevant securities authorise the listed company to purchase its own equity shares.

LR 12.4.9R

A circular convening a meeting required by LR 12.4.7 R must include (in addition to the information in LR 13 (Contents of circulars)):

  1. (1)

    a statement of the effect on1 the conversion expectations of holders in terms of attributable assets and earnings, on the basis that the company exercises the authority to purchase its equity shares in full at the maximum price allowed (where the price is to be determined by reference to a future market price the calculation must be made on the basis of market prices prevailing immediately prior to the publication of the circular and that basis must be disclosed); and

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  2. (2)

    any adjustments to the rights of the holders which the company may propose (in such a case, the information required under paragraph (1) must be restated on the revised basis).

Other similar transactions

LR 12.4.10G

A listed company intending to enter into a transaction that would have an effect on the company similar to that of a purchase of own equity shares should consult with the FCA to discuss the application of LR 12.4.