Off-market buyback by written resolution: majority and seller's eligibility (CA 2006 ss.694-695)

A purchase by a company of its own shares other than on a recognised investment exchange is an off-market purchase. Under s.694(2) CA 2006, the terms of the contract must be authorised by a resolution of the company before it is entered into (or the contract must be conditional on such authorisation). Since amendments in 2013 the section requires only a 'resolution', which means an ordinary resolution unless the articles require more (s.281(3)); the model articles do not. Section 695(2) provides that where the resolution is proposed as a written resolution, a member holding shares to which the resolution relates is not an eligible member. Hugo is therefore excluded. The eligible voting rights are Beatrix's 400 and Cyrus's 300, and a simple majority of that total (more than 350) is needed. Beatrix's agreement alone would pass it.

Why A is wrong: Section 694 requires only an ordinary resolution, and Hugo is not an eligible member on a written resolution about his own shares (s.695(2)).

Why B is wrong: The word 'special' was removed from s.694 in 2013; an ordinary resolution suffices, so Beatrix and Cyrus need not both agree.

Why D is wrong: Section 695(2) makes the selling shareholder ineligible to vote on a written resolution authorising the purchase of his shares.

Why E is wrong: Funding from distributable profits does not remove the requirement in s.694 for members to authorise an off-market purchase contract.