Share Buybacks/Share for Share Exchanges

Sometimes the simplest way to deal with a shareholder’s exit, or to reorganise how shares are held, isn’t a sale to a third party at all. It’s the company buying back its own shares, or exchanging them for shares in another company. We advise on both, and the paperwork that has to go alongside them.

Share buybacks

A share buyback is when the company itself purchases shares from one of its shareholders, rather than another shareholder or an outside buyer doing so. It’s often used to let a shareholder exit cleanly, resolve a dispute, or support succession planning when an older shareholder is ready to step back.

Buybacks can be funded a few different ways: out of distributable profits, through a fresh issue of shares, or, for private companies that meet the right conditions, out of capital. Each route carries its own procedure, including shareholder approval and, in some cases, a director’s statement confirming the company can still meet its debts afterwards.

We advise on which funding route suits your situation, prepare the resolutions and contracts involved, and make sure the buyback is properly recorded at Companies House.

Share for share exchanges

A share for share exchange works differently: instead of cash changing hands, shareholders exchange their shares in one company for shares in another. This comes up most often when a new holding company is being inserted above an existing business, or as part of the consideration in an acquisition.

We advise on the structure and the documentation, and work alongside your accountant or tax adviser on the wider implications, since exchanges like this often have their own tax treatment to consider.

A buyback or a share exchange can resolve what a straightforward sale can’t, so long as the funding route and the paperwork are right.