Buy‑back procedure—general
257B Buy‑back procedure—general
The following table specifies the steps required for, and the sections that apply to, the different types of buy‑back.
Procedures | minimum holding | employee share | on‑market | equal access scheme | selective buy‑back | |||
|---|---|---|---|---|---|---|---|---|
within 10/12 limit | over 10/12 limit | within 10/12 limit | over 10/12 limit | within 10/12 limit | over 10/12 limit | |||
ordinary resolution | — | — | yes | — | yes | — | yes | — |
special/unanimous resolution [257D] | — | — | — | — | — | — | — | yes |
lodge offer documents with ASIC [257E] | — | — | — | — | — | yes | yes | yes |
14 days notice [257F] | — | yes | yes | yes | yes | yes | yes | yes |
disclose relevant information when offer made [257G] | — | — | — | — | — | yes | yes | yes |
cancel shares [257H] | yes | yes | yes | yes | yes | yes | yes | yes |
notify cancellation to ASIC [254Y] | yes | yes | yes | yes | yes | yes | yes | yes |
Subsections (2) and (3) of this section explain what an equal access scheme is. The 10/12 limit is the 10% in 12 months limit laid down in subsections (4) and (5). Subsections (6) and (7) of this section explain what an on‑market buy‑back is. See section 9 for definitions of minimum holding buy‑back, employee share buy‑back and selective buy‑back.
Equal access scheme
An equal access scheme is a scheme that satisfies all the following conditions:
the offers under the scheme relate only to ordinary shares;
the offers are to be made to every person who holds ordinary shares to buy back the same percentage of their ordinary shares;
all of those persons have a reasonable opportunity to accept the offers made to them;
buy‑back agreements are not entered into until a specified time for acceptances of offers has closed;
the terms of all the offers are the same.
In applying subsection (2), ignore:
differences in consideration attributable to the fact that the offers relate to shares having different accrued dividend entitlements;
differences in consideration attributable to the fact that the offers relate to shares on which different amounts remain unpaid;
differences in the offers introduced solely to ensure that each shareholder is left with a whole number of shares.
10/12 limit
The 10/12 limit for a company proposing to make a buy‑back is 10% of the smallest number, at any time during the last 12 months, of votes attaching to voting shares of the company.
Exceeding the 10/12 limit
A proposed buy‑back would exceed the 10/12 limit if the number of votes attaching to:
all the voting shares in the company that have been bought back during the last 12 months; and
the voting shares that will be bought back if the proposed buy‑back is made;
would exceed the 10/12 limit.
On‑market buy‑backs
A buy‑back is an on‑market buy‑back if it results from an offer made by a listed corporation on a declared financial market in the ordinary course of trading on that market.
A buy‑back by a company (whether listed or not) is also an on‑market buy‑back if it results from an offer made in the ordinary course of trading in a financial market outside Australia which ASIC declares in writing to be an approved overseas financial market for the purposes of this subsection. A buy‑back by a listed company is an on‑market buy‑back under this subsection only if an offer to buy‑back those shares is also made on a declared financial market at the same time.
A declaration under subsection (7) may be subject to conditions. Notice of the making of the declaration must be published in the Gazette.
This Act’s bill:Explanatory memorandumSecond reading speech
The statute text is free to read above. View subscription options to unlock the case-law research tools for each provision.