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Buachaill, Lawyer
Category: Republic of Ireland Law
Satisfied Customers: 10528
Experience:  Barrister 17 years experience
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I have been reading your answers on "Can a private Irish

Customer Question

Hi there,
I have been reading your answers on "Can a private Irish company repurchase shares from its founders" and I understand the laws surrounding a share buy back scenario. I have a couple of queries for which I can't seem to find the answer. Details of the situation are below:3 Shareholders holding 39% are proposing a company buy back of shares of the balance 61% (held by 4 different individuals. This is to regain control of the company as the rest of the shareholders are not involved in the company in any way. Are there any laws inhibiting what we propose to do here in terms of the limit of shares a company can buy back?We understand that this has to be done by passing a special resolution at an EGM and that the shareholder selling the shares back to the company cannot vote. This means we will need to pass 4 special resolutions (one for each shareholder) - is this possible?
Once the shares come back to the company, we would like to redistribute the ownership between the existing 3 shareholders (i.e. change the % owned by each person). What's the best way to do this? Cancel the shares and then issue more in the future?We also have a fourth individual (not part of the original shareholders) who wishes to purchase 10% shares in the future. Again, what's the best way to do this, to keep 10% shares as treasury shares for resale to this person or to re-issue shares at the same time as we intend to redistribute the shareholding among the 3 existing shareholders?
Are there any pitfalls or concerns with the above outlined course of action and is there an easier way to go about this?Many thanks
Submitted: 1 year ago.
Category: Republic of Ireland Law
Expert:  Buachaill replied 1 year ago.

1. Dear *****ph, At the outset, there is nothing which inhibits the extent to which a company can buy back its own shares provided there are shares in existence. In your plan, you will have to pass 4 special resolutions - one for each shareholder being cancelled - in order to achieve your plan. However, I would advise you to cancel the shares once you have bought them back. It is a bad idea to have Treasury shares handing around particularly where there are three shareholders who ultimately might not agree what to do with them. You are better for everybody concerned to simply issue new shares when you wish, rather than have Treasury shares in existence where a simple majority of 50% can decide to whom they go.

2. Secondly, I would issue the new shares for consideration being provided to the company. Even if this is only one euro for existing shareholders. The new shareholder can buy into the company and 10% can be issued to him or her for fresh money being provided. This ensures the company has a higher share capital, rather than simply being thinly capitalised. It helps when you want to get finance from a bank.