A share buy-back occurs when a company buys back shares from a shareholder. A company can only buy back shares if:
- the buy-back does not have a materially adverse effect on the company’s ability to pay back its creditors;
- the company follows the process set out in Pt 2J.1 Division 2 of the Corporations Act 2001 (the Act).
Types of Share Buy Backs
| Type of Buy-Back | Description |
|---|---|
| Selective Buy-Backs | Company buys back shares from a select shareholder on select terms. |
| Equal Access Schemes | Company makes an offer to buy back the shares of all shareholders on the same terms. |
| Employee Share Scheme Buy-Backs | Company buys shares that former and current employees held under an approved employee share scheme. |
The buy-backs differ depending on:
- whether a shareholder vote is needed;
- whether that vote is by special or ordinary resolution;
- which shareholder’s vote counts; and
- what information the company must provide to shareholders.