Corporations Act 2001

CHAPTER 2J - TRANSACTIONS AFFECTING SHARE CAPITAL  

Note: This Chapter is modified for CCIVs: see Division 2 of Part 8B.4 .

PART 2J.1 - SHARE CAPITAL REDUCTIONS AND SHARE BUY-BACKS  

Division 2 - Share buy-backs  

Note: This Division does not apply to a CCIV: see subsection 1231C(6) .

SECTION 257B   BUY-BACK PROCEDURE - GENERAL  

257B(1)    

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
[ and sections applied ]
		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 [ 257C ]	-	-	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

Note: 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

257B(2)    
An equal access scheme is a scheme that satisfies all the following conditions:

(a)    the offers under the scheme relate only to ordinary shares;

(b)    the offers are to be made to every person who holds ordinary shares to buy back the same percentage of their ordinary shares;

(c)    all of those persons have a reasonable opportunity to accept the offers made to them;

(d)    buy-back agreements are not entered into until a specified time for acceptances of offers has closed;

(e)    the terms of all the offers are the same.

257B(3)    
In applying subsection (2) , ignore:

(a)    differences in consideration attributable to the fact that the offers relate to shares having different accrued dividend entitlements;

(b)    differences in consideration attributable to the fact that the offers relate to shares on which different amounts remain unpaid;

(c)    differences in the offers introduced solely to ensure that each shareholder is left with a whole number of shares.

10/12 limit

257B(4)    
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

257B(5)    
A proposed buy-back would exceed the 10/12 limit if the number of votes attaching to:

(a)    all the voting shares in the company that have been bought back during the last 12 months; and

(b)    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

257B(6)    

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.

257B(7)    

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.

257B(8)    

A declaration under subsection (7) may be subject to conditions. Notice of the making of the declaration must be published in the Gazette .