Sky software will allow you to perform a buyback of shares by acquiring the shares or by paying back share premium. For some of the legal issues on shares please refer to the companies act.
Sky Sec handles a buyback of shares and share premium under the same transaction.
There should always be a valid business reason as to why this should be done. We are however not going to go through these reasons here as it is not within the scope of this document.
There are various procedures to be followed by a company in order to repurchase its own shares.
Acquisition by company of its own shares must be by adoption of a special resolution or a director ’s resolution depending on the MOI. One would need to examine the MOI to see who has the power. However there are unalterable provisions in the act that govern the buyback of shares.
Solvency and liquidity provisions must be adhered to as it is a distribution in terms of the Companies Act.
GENERAL PROVISIONS OF THE ACQUISITION OF A COMPANY ’S OWN SHARES
The acquisition by a company of its shares must be authorized by the MOI.
A special resolution can be by way of a general approval or a specific approval. If it is a general approval it is only valid until the next Annual General Meeting of the company.
There are a number of rules in regard to maintenance of solvency and liquidity of the company.
There are also certain requirements in regard to book entries that have to be entered in the books of account. The company cannot acquire all of its own shares, there must always be some shares in issue after a buyback.
If you select the buyback screen it will look like the screen below.
One needs to distinguish between Buyback and Redemption.
The Redemption only applies to Preference Shares that are acquired by the company.
The Buyback normally applies to Ordinary shares.
Split the shares
1000
The way the new share grid has been designed one can easily manipulate the shares in order to prepare for a future transaction. The screen below illustrates this, it is the end result of one share certificate, share certificate number 1 being split into share certificate number 2 and 3. This is just a question on clicking on the open space to the left of the line item shares certificates.
2000
The share ledger below indicates the split in the share certificates.
3000
The screen below shows the two share certificates 2 and 3 and you will see the left of the share certificate number 2 there is a little red icon, this means that it has been bought back. We would normally click on this area and then we would indicate the buy-back price. After we have done this we have clicked on the capital button which will be to the left of the brown share capital adjustment screen and you will see that we bought back 500 share certificates at R2 per share giving the total price of R1,000. The share capital, the share capital above reflects an adjustment, a payback of R500 to share capital and R500 to share premium, leaving the balance of R500 each with a total of R1,000.
4000
It really is a simple matter to do a buyback of share. Now all that is necessary is to do the paperwork.