Your company may purchase of its own shares if there is no restriction or prohibition in the articles of association. Your shareholders must approve it.
However, your company is not allowed to purchase of its own shares if this would leave only redeemable shares in issue.
You must notify Companies House when your company purchase of its own shares. Complete the form SH03 and send it to Companies House. The form SH03 is used for two purpose, shares purchased for cancellation and shares purchased into treasury.
For Private and Public company
When your company submit the form SH03 to notify Companies House a purchases its own shares event, your shares will be cancelled on their return. If your company is cancelling the shares immediately, the form SH06 which includes a statement of capital must also be delivered to Companies House.
For Public limited Company
However, if your company is a public limited company with qualifying share, your company may either cancel those shares immediately or hold them in treasury for resale or transfer to an employees’ shares scheme at a later date or cancel them at a later date.
Your company must notify the initial purchase of treasury shares with Companies House and if your company is cancelling those treasury shares immediately you must complete the form SH06 and send it to Companies House.
If your company sell or transfer the shares from treasury, your company must deliver the form SH04 and if your company subsequently cancels the shares, the form SH05 which includes a statement of capital must be registered with Companies House.
Stamp Duty on purchase of own shares
Purchase of your company’s own shares are subject to stamp duty if the consideration for your shares is above £1000, HM Revenue & Customs (HMRC) must stamp the form SH03 before it is to be delivered to Companies House, if the consideration is £1000 or less, your company need not send your form to HM Revenue and Customs to be stamped, but your company must sign and declare that fact on your form.
You may use a single form SH03 to notify Companies House of purchase of shares on different dates and under different contracts.
See accountants advice if you are not familiar with administration for purchase of own shares with Companies House.