Section 71 — Companies Act 1993: Special redemption of shares

71 Special redemption of shares (1) A company may exercise an option to redeem shares under section 69(1)(b)(ii) of this Act only if the board has previously resolved— (a) That the redemption of the shares is of benefit to the remaining shareholders; and (b) That the consideration for the redemption of the shares is fair and reasonable to the remaining shareholders. (2) The resolution must set out in full the grounds for the directors' conclusions. (3) The directors who vote in favour of a resolution required by subsection (1) of this section must sign a certificate as to the matters set out in that subsection. (4) A company must not exercise an option to redeem shares under section 69(1)(b)(ii) of this Act if, after the passing of a resolution under subsection (1) of this section and before the option is exercised, the board ceases to be satisfied that— (a) The redemption of the shares is of benefit to the remaining shareholders; or (b) The consideration for the redemption of the shares is fair and reasonable to the remaining shareholders. (5) Before the option is exercised pursuant to a resolution under subsection (1) of this section, the company must send to each shareholder a disclosure document that complies with section 72 of this Act. (6) The option must be exercised not less than 10 and not more than 30 working days after the disclosure document has been sent to each shareholder. (7) A shareholder or the company may apply to the Court for an order restraining the proposed exercise of the option on the grounds that— (a) It is not in the best interests of the company or of benefit to remaining shareholders; or (b) The consideration for the redemption is not fair or reasonable to the company or remaining shareholders. (8) Every director who fails to comply with subsection (3) of this section commits an offence and is liable on conviction to the penalty set out in section 373(1) of this Act. (9) If a company fails to comply with subsection (5) of this section,— (a) The company commits an offence and is liable on conviction to the penalty set out in section 373(1) of this Act; and (b) Every director of the company commits an offence and is liable on conviction to the penalty set out in section 374(1) of this Act.