The company buys back shares from it's shareholders at an agreed value.
There are 8 different types of share buy backs handled by CAS 360. These are as follows:
Employee share scheme within 10/12 limit
Employee share scheme over 10/12 limit
On-Market within 10/12 limit
On-Market over 10/12 limit
Equal Access Scheme within 10/12 limit
Equal Access Scheme over 10/12 limit
Selective Buy-Back
Minimum Holding
What is the 10/12 limit?
The company buying back 10% of their issued share capital within a 12 month period. The buy back rules differ for companies that are buying back more than 10% in a 12 month period from those that are buying back less than 10% in 12 months.
Lodgement Process for a Share Buyback
Lodging ASIC forms for a share buyback is different to other company changes. Here is a basic guideline to lodging a share buyback:
The form 280 must be lodged to ASIC first (The form 280 may also include the form 281 depending on the share buyback type. See forms prepared section) These forms will state the intention to buyback shares. These are manual form so it cannot be electronically sent. This must be lodged at least 14 days before the buy back is to occur. These forms advises ASIC that the company is offering to buyback shares to some or all shareholders.
If the shareholders choose to exercise the buyback, the form 484 must be lodged to advise ASIC of the company change. This form will confirm that the buyback has occurred. This must be lodged at least 14 days after the form 280 (and Form 281) had been lodged and accepted. If the shareholders have not decided to exercise the buyback offer, no forms are required to be lodged.
Navigation
From the Main Toolbar, go to Company.
Select the Company from the list.
Select Shareholders
Click
Select Share Buy Backs
Instructions
CAS 360 will display the Buy Backs screen.
Field
Explanation
Transaction Date
Input the date the Buy Back will occur
Shareholder
In the shareholder field, CAS 360 will display a list of the company's current shareholders
Beneficial Owner
CAS 360 will automatically prefil this field if there is a beneficial owner.
Share Type
In the Share type field, CAS 360 will display a list of the share types the shareholder holds
Number of shares
Input the relevant number of shares effected
Buy back Amount Per Share
Amount paid to the shareholder for each share bought back
Buy Back Type
Select the appropriate buy back type (See below for more information)
Proposed date for buy-back agreement to be entered into
The date the company expects to formally enter into agreements with shareholders to buy back their shares. This date will appear on ASIC Forms 280 or 281 (when applicable) and must be dated on or before the transaction date.
Proposed date for passing the resolution to approve the buy-back (For buybacks over the 10/12 limit)
For buy-backs exceeding the 10/12 limit, an ordinary resolution (passed by a simple majority of shareholders) is required. This should be the date the company expects that resolution to be passed. This date will appear on ASIC Forms 280 or 281 (when applicable) and must be dated on or before the transaction date.
Meeting Status
Select the meeting status of the member which will appear on the Resolutions.
Notes
Add extra notes to appear on the Register of Members
Click
Buy back type
Share buy-backs are subject to many different rules and requirements under the Corporations Act. Therefore, it is recommended that you seek legal assistance before completing any share buy-backs. Below is an overview of the share buy-back provisions.
There are five basic types of share buy-backs:
equal access
selective buy-backs
employee share scheme
on-market buybacks
minimum holding (previously called "odd lot").
Within those types, different rules also apply between share buy-backs the 10/12 limit, and is laid down in subsections 257B(4) and 257B(5) of the Corporations Act 2001 (the Act). The requirements for share buy-backs within the 10/12 limits are less onerous than those over that limit.
Equal Access Buy Backs All ordinary shareholders are offered the opportunity to engage in the buy back at the same percentage of their ordinary shares.
If a proposed share buy-back is over the 10/12 limit, then it can only take place after passing an ordinary resolution (a simple majority vote of shareholders). A proposed share buy-back within the 10/12 limit does not require a resolution.
An equal access buy-back allows companies to devise their own timetable to suit their circumstances (within limits) as long as no shareholders are unfairly disadvantaged. The limits include:
a minimum of 14 days notice to shareholders and creditors must be given by lodging the buy-back documents with ASIC
shareholders must receive a reasonable time to consider the buy-back offer
buy-back must be commenced and completed within a reasonable time of the notice being lodged with ASIC
It is also important to note, when preparing a buy-back timetable,that the notice period for company meetings is - 21 days for unlisted (section 249H), and 28 days for listed companies (section 249HA). This may extend the time for lodgement of documents which must be lodged with ASIC before a meeting (e.g. sub-section 257C(3)), but it does not affect other time periods, such as the notice period under sub-section 257F(1) which gives a minimum time period of 14 days for notice. Clearly lodging documents under sub-section 257C(3) 28 or 21 days before a meeting would still satisfy the requirement of sub-section 257F(1).
Selective buy-backs
The Buy Back offers are not made to every shareholder and only some of the shareholders in the company. First this must be approved by all shareholders or by a special resolution (requiring a 75% majority vote) of the members where no vote is cast by selling shareholders. Selling shareholders may not vote in favour of a special resolution to approve a selective buy-back. The 10/12 limit does not apply to this type of buy-back.
Other types of buy-backs A company may also buy back shares held by or for employees or salaried directors of the company or a related company. This type of buy-back, is referred to as an employee share scheme buy-back, which requires an ordinary resolution if over the 10/12 limit.
A listed company may also buy back its shares in on-market trading on the stock exchange. If over the 10/12 limit, it will require an ordinary resolution.
A listed company may also buy unmarketable parcels of shares from shareholders (called a minimum holding buy-back). This does not require a resolution but the purchased shares must still be cancelled.
Forms Prepared
CAS 360 will display the Document Production screen and automatically select the documents required.
Each buy back type has differing document requirements. These documents required for each buy back type and the order of preparation and lodgement are as follows:
Employee Share Scheme or On Market within 10/12 limit
Directors Meeting Minute or Resolution
Registers – Members
Intention to carry out a Share Buy-Back Form 281 (Must be lodged at least 14 days before members meeting)
Share Cancellation Form 484
Employee Share Scheme or On Market over 10/12 limit
Directors Meeting Minute or Resolution
Registers – Members
Share Buy-Back Details Form 280
Intention to carry out a Share Buy-Back Form 281 (Only required if the company intends to give Short Notice of members meeting)
Share Cancellation Form 484
Equal Access Scheme
Directors Meeting Minute or Resolution
Registers – Members
Share Buy-Back Details Form 280
Intention to carry out a Share Buy-Back Form 281 (Only required if the company intends to give Short Notice of members meeting)
Share Cancellation Form 484
Selective Buy-Back
Directors Meeting Minute or Resolution
Registers – Members
Share Buy-Back Details Form 280
Intention to carry out a Share Buy-Back Form 281 (Only required if the company intends to give Short Notice of members meeting)
Share Cancellation Form 484
Reduction in Share Capital Details Form 2560 (before the notice of meeting is sent to members) - Coming Soon
CAS 360 allows you to prepare documents and then notify ASIC through electronic lodgement via the Documents Screen. For more information on how to do so, click here.
Troubleshooting: Section C4 shows shares as both decreased and still held
Section C4 of the Form 484 reports the change to the register of members as at the Form 484’s document date, not the Transaction Date of the Buy Back itself. If the Form 484’s document date is earlier than the Buy Back’s Transaction Date, the buy-back has not yet taken effect as at that document date. This causes Section C4 to show the bought-back shares as a decrease, while still counting them in the shareholder’s remaining holding e.g. a decrease of 100 shares, with 100 still shown as held.
This most commonly happens when a Buy Back transaction is toggled on in the Shareholders screen and the documents are prepared using the default document date (today’s date), while the Buy Back’s Transaction Date is set for a future date.
To resolve
Go to the Documents screen and delete any previously prepared Form 484 for this change.
Return to the Shareholders screen, with the Buy Back transaction toggled on, and re-prepare the documents.
Before generating the Form 484, set its document date to the same date as, or a date after, the Buy Back’s Transaction Date.
Section C4 will now correctly reflect the shareholder’s holding after the buy-back (i.e. the shares removed and no longer counted as held).