Capital Protection
Companies Act
Company acquiring its own shares, etc. — permissible circumstances and prohibitions
102. (1) Subject to the provisions of this Chapter, a company may acquire its own fully paid shares—
(a) by transfer or surrender to the company otherwise than for valuable consideration;
(b) by cancellation pursuant to a reduction of company capital by either of the means referred to in section 84 ;
(c) pursuant to an order of the court under section 212 ;
(d) where those shares are redeemable shares, by redemption or purchase under section 105 ;
(e) by purchase under section 105 ;
(f) where those shares are preference shares referred to in section 108 , by redemption under that section; or
(g) pursuant to a merger or division under Chapter 3 or 4 of Part 9 .
(2) Without prejudice to the powers of a company with respect to forfeiture of its own shares as provided by this Part or to accept any of its own shares surrendered in lieu for failure to pay any sum payable in respect of those shares, a company may not acquire any of its own shares otherwise than as described in the preceding subsection, but nothing in that subsection or any other provision of this section affects the lawfulness of a merger effected in accordance with Chapter 3 of Part 9 or a scheme of arrangement sanctioned under that Part.
(3) If a company purports to act in contravention of subsection (2), the company and any officer of it who is in default shall be guilty of a category 2 offence and the purported acquisition is void.
(4) Subject to section 103 , a private limited subsidiary shall not—
(a) subscribe for the shares of its parent public company; or
(b) purchase shares in its parent public company which are not fully paid.
(5) If a private limited subsidiary purports to act in contravention of subsection (4)(a), that subsidiary and any officer of it who is in default shall be guilty of a category 2 offence and the purported subscription is void.
(6) Where shares in a parent public company are subscribed for by a nominee of a private limited subsidiary, then for all purposes the shares shall be treated as held by the nominee on his or her own account and the private limited subsidiary shall be regarded as having no beneficial interest in them, and the provisions of section 104 shall, with any necessary modifications, apply.
(7) Without prejudice to any other requirements contained in or penalties imposed by this Act, where a private limited subsidiary purchases, subscribes for or holds shares in its parent public company, and—
(a) in the case of a purchase, the shares were not fully paid when they were purchased; or
(b) the authorisation required by section 114 (3) has not been obtained; or
(c) by virtue of their being treated (under subsection (2) of section 109 ) as shares held as treasury shares by the parent public company for the purposes of the limit provided by subsection (1) of that section, that limit is exceeded by the parent public company; or
(d) the purchase or subscription was in contravention of section 82 (7),
then, unless the shares or any interest of the private limited subsidiary in them are previously disposed of, the provisions of sections 1040 and 1041 shall apply to the private limited subsidiary in respect of such shares, with the modification that the “relevant period” (as that expression is used in those sections) in relation to any shares shall be 12 months and with any other necessary modifications.
Supplemental provisions in relation to section 102
103. (1) Section 102 shall not affect or prohibit—
(a) subject to subsection (2), the subscription for, acquisition or holding of shares in its parent public company by a private limited subsidiary where the private limited subsidiary is concerned as personal representative or where it is concerned as trustee;
(b) without prejudice to subsection (3), the allotment to, or holding by, a private limited subsidiary of shares in its parent public company in the circumstances set out in section 113 (6);
(c) the subscription, acquisition or holding of shares in its parent public company by a private limited subsidiary where the subscription, acquisition or holding is effected on behalf of a person other than the person subscribing, acquiring or holding the shares, who is neither the parent public company itself nor a subsidiary of that parent public company; or
(d) the subscription, acquisition or holding of shares in its parent public company by a private limited subsidiary which is a member of an authorised market operator acting in its capacity as a professional dealer in securities in the normal course of its business.
(2) The restriction on the application of section 102 by subsection (1)(a) does not have effect (in the case of a trust) if the parent public company or a subsidiary of it is beneficially interested under the trust and is not so interested only by way of security for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.
(3) Where shares in a parent public company—
(a) are allotted to, or held by, a private limited subsidiary as mentioned in subsection (1)(b); and
(b) by virtue of their being treated (under subsection (2) of section 109 ) as shares held as treasury shares by the parent public company for the purposes of the limit provided by subsection (1) of that section, that limit is exceeded by the parent public company,
then, unless the shares or any interest of the private limited subsidiary in them are previously disposed of, the provisions of sections 1040 and 1041 shall apply to the private limited subsidiary in respect of such shares, with the modification that the “relevant period” (as that expression is used in those sections) in relation to any shares shall be 3 years and with any other necessary modifications.
Shares of a company held by a nominee of a company
104. (1) Subject to subsection (5), where shares in a company are issued to a nominee of the company or are acquired by a nominee of the company from a third party as partly paid up, then for all purposes the shares shall be treated as held by the nominee on his or her own account and the company shall be regarded as having no beneficial interest in them.
(2) If a person is called on to pay any amount for the purpose of paying up, or paying any premium on, any shares in a company which were issued to him or her, or which he or she otherwise acquired, as the nominee of the company and he or she fails to pay that amount within 21 days after the date on which he or she is called on to do so, then—
(a) if the shares were issued to him or her as a subscriber to the constitution by virtue of an undertaking of his or hers in the constitution, the other subscribers, if any, to the constitution; or
(b) if the shares were otherwise issued to or acquired by him or her, the directors of the company at the time of the issue or acquisition,
shall be jointly and severally liable with him or her to pay that amount.
(3) If in proceedings for the recovery of any such amount from any such subscriber or director under this section, it appears to the court that he or she is or may be liable to pay that amount, but that he or she has acted honestly and reasonably and that, having regard to all the circumstances of the case, he or she ought fairly to be excused from liability, the court may relieve him or her, either wholly or partly, from his or her liability on such terms as the court thinks fit.
(4) Where any such subscriber or director has reason to apprehend that a claim will or might be made for the recovery of any such amount from him or her, he or she may apply to the court for relief and on the application the court shall have the same power to relieve him or her as it would have had in proceedings for the recovery of that amount.
(5) Subsections (1) and (2) shall not apply—
(a) to shares acquired by a nominee of a company where the company has no beneficial interest in those shares (disregarding any right which the company itself may have as trustee, whether as personal representative or otherwise, to recover its expenses or be remunerated out of the trust property); or
(b) to shares issued in consequence of an application made for them before 13 October 1983 or transferred in pursuance of an agreement to acquire them made before that date.
Acquisition of own shares
105. (1) A company may acquire its own shares by purchase, or in the case of redeemable shares, by redemption or purchase.
(2) Any such acquisition is subject to payment in respect of the shares’ acquisition being made out of—
(a) profits available for distribution; or
(b) where the company proposes to cancel, pursuant to section 106 , shares on their acquisition, the proceeds of a fresh issue of shares made for the purposes of the acquisition, but subject to the restriction contained in subsection (3) as respects such proceeds being used to pay a premium there referred to.
(3) Where the shares being acquired were issued at a premium, some or all of the premium payable on their acquisition (being an acquisition to which subsection (2)(b) applies) may be paid out of the proceeds of a fresh issue of shares made for the purposes of the acquisition, up to an amount equal to—
(a) the aggregate of the premiums received by the company on the issue of the shares acquired; or
(b) the current amount of the company’s undenominated capital (including any sum transferred to its share premium account in respect of premiums on the new shares),
whichever is less, and in any such case the amount of the company’s share premium account or other undenominated capital shall be reduced by a sum corresponding (or by sums in the aggregate corresponding) to the amount of any payment made by virtue of this subsection out of the proceeds of the issue of the new shares.
(4) Subject to this Part, the acquisition by a company of its own shares shall be authorised by—
(a) the constitution of the company;
(b) the rights attaching to the shares in question; or
(c) a special resolution.
(5) A special resolution under subsection (4) shall not be effective for the purposes of this section if any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution and the resolution would not have been passed if he or she had not done so.
(6) With respect to subsection (4) and the matter of passing a special resolution for the purpose thereof by the written means provided for under this Act—
(a) the procedure under section 193 (unanimous written resolutions) is not available for that purpose;
(b) if a resolution referred to in section 194 (majority written resolutions) for the purpose of subsection (4) is signed by a member of the company who holds shares to which the resolution relates, then, in determining whether the requirement under section 194 (4)(a)(ii) — that the resolution be signed by the requisite majority — has been fulfilled, no account shall be taken of the percentage of voting rights conferred by the foregoing shares of that member.
(7) Notwithstanding anything contained in section 189 or in the company’s constitution, any member holding one or more shares in the company conferring the right to vote at the meeting concerned may demand a poll on a special resolution under subsection(4).
(8) Where a purchase of shares is proposed to be authorised by special resolution—
(a) the proposed contract of purchase or, if the contract is not in writing, a written memorandum of its terms shall be furnished to the members of the company on request or made available for inspection by the members at the registered office of the company from the date of the notice of the meeting at which the resolution is to be proposed and at the meeting itself;
(b) any memorandum of the terms of the contract of purchase made available for the purposes of paragraph (a) shall include the names of any members holding shares to which the contract relates, and any copy of the contract made available for those purposes shall have annexed to it a written memorandum specifying any such names which do not appear in the contract itself.
(9) With respect to the proposed authorisation of a purchase of shares by a resolution referred to in section 194 , the requirements of subsection (8) shall also apply but with the modification that in paragraph (a) of that subsection “during the period of 21 days before the date of the signing of the resolution by the last member to sign” shall be substituted for “from the date of the notice of the meeting at which the resolution is to be proposed and at the meeting itself”.
(10) A company may agree to a variation of an existing contract of purchase authorised pursuant to a special resolution under this section only if the variation is authorised by special resolution of the company before it is agreed to, and subsections (5) to (9) shall apply in relation to that authority, save that a copy or memorandum (as the case may require) of the existing contract shall also be available for inspection in accordance with subsection (8).
(11) A company shall only make a purchase of its own shares in pursuance of an option if the terms of the option have been authorised by a special resolution of the company in accordance with subsections (5) to (9) and, for the purposes of this subsection, subsection (8) shall have effect as if the references in it to the contract of purchase were references to the contract under which the option arises.
(12) In subsection (11) “option” means an entitlement of the company, or an obligation on the part of the company, to purchase any of its shares that may arise under a contract entered into, being a contract that does not amount to a contract to purchase those shares.
Supplemental provisions in relation to section 105
106. (1) Shares acquired by a company under section 105 , or otherwise acquired by it under section 102 (1)(a), shall be cancelled or held by it (as “treasury shares”).
(2) Where a company—
(a) has acquired, under section 105 , shares and cancelled them; or
(b) is about to so acquire shares and cancel them upon their acquisition,
it shall have power to issue shares up to the nominal amount of the shares so acquired, or to be so acquired, as if those shares had never been issued.
(3) No cancellation of shares under subsection (1) shall be taken as reducing the amount of the company’s authorised share capital (if any).
(4) Where the shares are—
(a) under section 105 , acquired wholly out of the profits available for distribution; or
(b) under section 105 , acquired wholly or partly out of the proceeds of a fresh issue and the aggregate amount of those proceeds (disregarding any part of those proceeds used to pay any premium on the acquisition) is less than the aggregate nominal value of the shares acquired (the “aggregable difference”),
then a sum equal to, in the case of paragraph (a), the nominal value of the shares acquired and, in the case of paragraph (b), the aggregable difference shall be transferred to undenominated capital of the company, other than its share premium account.
(5) The amount by which the consideration paid for the acquisition of redeemable preference shares allotted before 1 February 1990 exceeds the consideration received by the company on the issue of those shares may be paid from undenominated capital.
(6) Section 105 shall not apply to the redemption of preference shares referred to in section 108 and no such shares may be the subject of purchase under section 105 .
The text in italics on this page is sourced from the Irish Statute Book and is re-published under the Licence for Re-Use of Public Sector Information made pursuant to Directive 2003/98/EC Directive 2013/37/EU of the European Parliament and of the Council on the re-use of public sector information transposed into Irish law by the European Communities (Re-Use of Public Sector Information) Regulations 2005 to 2015.