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Special resolutions and other resolutions requiring 75 per cent member approval under the Companies Act 2006—checklist

Special resolutions and other resolutions requiring 75 per cent member approval under the Companies Act 2006—checklist Special resolutions The Companies Act 2006 (CA 2006) sets out certain matters that must be passed by the members (or by a class of members) of a company as a special resolution (ie by a majority of not less than 75%) or by the holders of at least 75% of shares or of a class of shares. If a written resolution is to be passed as a special resolution, to be effectively passed as a special resolution, it must state that the resolution was proposed as a a special resolution. See Practice Notes: Member resolutions and Written resolutions for more details about shareholder resolutions and written resolutions. Note that: • anything done by ordinary resolution may also be done by special resolution, and • in addition to complying with the requirements of CA 2006, it may be necessary to comply with the requirements of any shareholders' agreement (or other governing document) as...

Private company share buybacks (no payment out of capital under CA 2006, Pt 18, Ch 5)—checklist

Private company share buybacks (no payment out of capital under CA 2006, Pt 18, Ch 5)—checklist A limited company may buy back shares in itself, if certain conditions set out in the Companies Act 2006 (CA 2006) are met. This is known as a share buyback or a purchase of own shares. In addition to the provisions of the CA 2006, there are other rules and guidelines that are relevant to a listed company or an AIM company. A private limited company will only buy back its shares off-market. Therefore, this checklist does not deal with on-market share buybacks. For an introduction to share buybacks, including an explanation of the differences between an off-market share buyback and an on-market share buyback, see Practice Note: Share buybacks—the legal framework. Preliminary issues Before proceeding with a share buyback, a private limited company should consider a number of issues and may need to take a number of steps. For further information, see Practice Notes: Private company share buybacks—initial considerations and Tax issues on...

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Funding an employee benefit trust

Funding an employee benefit trust This Practice Note covers the following issues in relation to the funding of an employee benefit trust (EBT): • practical aspects of funding an EBT • financial assistance—the background • financial assistance—the current position • relevance of financial assistance to EBTs • financial assistance—exemptions • the employees’ shares scheme exemption • consequences of non-compliance of the financial assistance provisions • tax implications for close companies which fund EBTs, and • corporation tax relief in respect of EBT funding Practical aspects of funding an EBT When an EBT is first set up, it needs to be provided with initial financing, as a trust cannot exist without initial trust assets. It is common for a nominal amount, for example £100, to be settled on the trustee in order to establish the EBT (for further details, see Practice Note: Setting up an EBT). However, after the EBT has established, other funding can be provided. This may be by way of: • voluntary contribution • loan...

Court procedure—reduction of capital—effect of the reduction

Court procedure—reduction of capital—effect of the reduction It is a fundamental rule of English company law that a limited company having a share capital must maintain that capital. Therefore, a company must not reduce its capital, except as prescribed by law. This capital maintenance rule is intended to protect a company’s creditors by ensuring that the assets representing the capital of a company remain available to them for future recourse. There are provisions in the Companies Act 2006 (CA 2006) governing how a limited company may reduce its capital. The restrictions in CA 2006 relating to reductions of capital do not apply to unlimited companies. For further information on this type of company, see Practice Note: Unlimited companies. The focus of this Practice Note is on reductions of capital in accordance with CA 2006, Pt 17, Ch 10, in particular, those carried out by a special resolution confirmed by court order (the court procedure) rather than those carried out by a special resolution supported by a solvency...

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Ireland—Member’s consent to short notice of a general meeting of a private limited company

Ireland—Member’s consent to short notice of a general meeting of a private limited company This Precedent sets out standard wording for the agreement of members of a private company limited by shares to agree to short notice of a general meeting. For details on the notice periods required for general meetings for private companies limited by shares, see Precedent: Ireland—Notice of an extraordinary general meeting of a private limited company. Company number: [insert number] [insert company name] Limited (the Company) Agreement of members to short notice of a general meeting Calling a meeting on short notice A general meeting may be called on short notice if agreed by: • all the members entitled to attend and vote at the meeting, and • the statutory auditors of the company (unless the company has availed of the statutory audit exemption under CA 2014 (IRL), s 360 or CA 2014 (IRL), s 365 Please note that in addition to the above requirement to convene a meeting at short notice, to propose and...

Unapproved share option agreement—standalone deed for employee

Unapproved share option agreement—standalone deed for employee This AGREEMENT is made on [insert date of execution of the share option agreement] Parties 1 [insert name of company whose shares are being granted under option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company);[and] 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) [and] 3 [[insert name of grantor (if different from company)] of [insert address of grantor] (the Grantor)] Background (A) [The Company has agreed to grant to the Option Holder as at the date of this Agreement an Option to acquire Shares on the terms set out in this Agreement. OR The Company and the Grantor intend that, as at the date of this Agreement, the Option Holder be granted an Option to acquire Shares on the terms set out in this Agreement.] (B) [The Company will satisfy the exercise of the Option by transferring or procuring the...

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Can an enterprise management incentives (EMI) option holder claim business asset disposal relief in relation to the sale of shares resulting from the exercise of an EMI option if a disqualifying event has previously occurred?

Can an enterprise management incentives (EMI) option holder claim business asset disposal relief in relation to the sale of shares resulting from the exercise of an EMI option if a disqualifying event has previously occurred? Business asset disposal relief (BADR) is a reduced rate of capital gains tax (CGT) that individuals or trustees, but not companies, can claim when they dispose of business assets. Certain conditions must be met before the relief will apply. In relation to disposals made after 6 April 2025, the effect of the relief is to reduce the rate of CGT on the disposal to 14% on a lifetime limit of gains of up to £1m. Previously, the rate of CGT that applied when BADR was available was 10%, but this was increased by the Finance Act 2025, which also legislated that the rate would be further increased to 18% for disposals made on or after 6 April 2026. For details of the qualifying conditions for BADR and the lifetime limit that applies to it, see...