Stuart Haynes, from our commercial corporate team, said currently there were extremely strict regulations in place about how shares markets should operate within a business.
“New proposals have now been submitted to the Government to suggest a simplified shares process in a bid to encourage more employees to take up the offer, and to help improve the operation of internal share markets.
“These include reducing the number of shareholder votes required to authorise buying back shares from 75% to 50%, and allowing private limited companies to pay for their own shares in instalments. This is a very important move, as it will help companies who have been struggling to make enough distributable profits during the recession to reconsider their position, and allow them to re-organise and move forward.
“The new rules would also allow private limited companies to hold shares they buy back as treasury shares, which means they can be reissued.”
Stuart said the proposals would allow companies to approve multiple buy backs in advance through a single resolution, and private limited companies would be able to finance any buy backs connected to an employee share scheme out of their capital budget.
“It will be extremely interesting to see how these proposals develop, particularly given the ongoing economic difficulties the country is facing, as they really could help companies make some progress.The proposals are a good step in the right direction towards cutting red tape and simplifying processes to make companies more efficient and to reduce company costs.
“Let’s hope the final version of the proposals is as positive and helpful as this first initial batch.”