Following Steven’s divorce he speaks to his brother, Thomas, as he has decided he wants to ‘cash in’ on MexxaMixx and start afresh with a different venture. Although Thomas is slightly anxious about the change he is happy for Steven to do this.
Thomas and Steven ask Thomson Snell & Passmore how they can exit Steven from MexxaMixx.
We recommend that the most efficient way of exiting Steven from the business would be for MexxaMixx to buy back his shares. Prior to the meeting with Thomas & Steven, we checked the following to ensure MexxaMixx satisfied the criteria to carry out a share buyback:
- we looked at MexxaMixx’s accounts to ensure they had sufficient distributable profits in order to buy back Steven’s shares;
- we looked at the articles of association to ensure there was nothing prohibiting the company from buying back the shares; and
- we checked that Steven’s shares were fully paid.
Following our checks and satisfying ourselves that the company can buy back Steven’s shares we begin to explain the documentation that will be needed to effect the buyback. Firstly, Steven will need to enter into a short share buyback agreement with MexxaMixx. The agreement will document the shares that are being bought back, the consideration payable for the shares and any completion details (such as completion dates).
Board minutes and an ordinary resolution will need to be prepared and signed by the directors and shareholder of MexxaMixx respectively.
Companies House form SH03 will also need to be completed and signed by the company. This is the notice of a purchase by a private limited company of its own shares.
MexxaMixx does not want to hold the shares bought back from Steven in treasury and so the shares will need to be cancelled. In order to do this a Companies House form will need be completed giving notice of a cancellation of shares in respect of the company.
Finally, MexxaMixx will need to update their statutory registers to reflect the changes in the company.
First published by Sevenoaks Chronicle, November 2015.