There are many reasons for a company wanting to buy back a shareholder’s shares. If the company is looking to buy back only the shares of one particular shareholder, it is called a selective buyback. To properly effect the buyback of a shareholder’s shares by the company, there are several steps which need to be followed.


Once the company has decided to conduct a selective buyback, it must send to all its shareholders:

  • a notice for general meeting; and
  • a statement which sets out all information known to the company which is material to the decision for the buyback.

Before the notice of the meeting is sent to all shareholders, the company must notify ASIC by lodging a Form 280, and provide:

  • a copy of the notice of the meeting; and
  • the documents attached to the notice.

This is required under section 257D of the Corporations Act.

After the Form 280 has been lodged with ASIC, the company is required to wait 14 days before executing the buyback agreement, or taking other steps to buy back its shares.

Obtain shareholder approval

After 14 days have passed since the lodgement of the Form 280, the company can then send out the notice to its shareholders. At the shareholder meeting, for a selective buyback, there must be approval by:

  • all of the shareholders; or
  • a special resolution (a 75% majority) of the members where no vote is cast by the selling shareholder or their associates.

Board meeting

Once shareholder approval is obtained, there needs to be a board meeting. The board of directors need to provide their approval for the company to enter into a buyback agreement with the selling shareholder.

Buyback agreement

The parties to the buyback agreement are the company and the selling shareholder/s. The buyback agreement is a detailed agreement which covers exit arrangements with the selling shareholder. We will cover this in detail in part 2.

Next steps

Once the company has entered into the buyback agreement, and all conditions for completion have been met under the buyback agreement, the company then needs to cancel the shares that were the subject of the buyback. If the company has an online account with ASIC, this can be done online.

After the shares have been cancelled, the company needs to update the share register and notify ASIC of the changes. If the selling shareholder was a director, and that shareholder resigned as a director, then the company needs to make sure ASIC is aware of the director resignation.


If you require assistance with all or any of the steps mentioned above, contact one of LegalVision’s commercial lawyers today! Our commercial lawyers have extensive experience in corporate and commercial law and would be happy to assist you.

In part 2 we will be looking at what needs to be covered under a share buyback agreement so that both parties are protected. Stay tuned!

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