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Stock Redemption Agreement Template for England and Wales

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Key Requirements PROMPT example:

Stock Redemption Agreement

"I need a Stock Redemption Agreement for our tech startup to buy back 10,000 shares from a departing co-founder, with payment to be made in three installments over 6 months starting March 2025."

Document background
A Stock Redemption Agreement is essential when a company wishes to buy back its shares from existing shareholders, commonly used in situations such as employee departures, succession planning, or corporate restructuring. Under English and Welsh law, this document must comply with the Companies Act 2006, particularly regarding capital maintenance rules and financial assistance provisions. The agreement typically includes share valuation methods, payment terms, representations and warranties, and may also address tax implications. It's crucial for maintaining proper corporate governance and protecting both the company's and shareholders' interests.
Suggested Sections

1. Parties: Identifies the company and selling stockholder(s)

2. Background/Recitals: Sets out context of the redemption and authority for the transaction

3. Definitions: Key terms used throughout the agreement including relevant legislation: Companies Act 2006, Financial Services and Markets Act 2000, Corporation Tax Act 2010

4. Agreement to Redeem: Core terms of the redemption including number of shares and price

5. Closing: Timing and mechanics of the redemption transaction

6. Representations and Warranties of Seller: Seller's confirmations regarding ownership and authority to sell

7. Representations and Warranties of Company: Company's confirmations regarding authority and compliance with law

8. Payment Terms: Details of consideration and payment mechanism

Optional Sections

1. Conditions Precedent: Prerequisites to closing, including any required regulatory approvals or third-party consents

2. Tax Matters: Specific tax treatment and obligations under Corporation Tax Act 2010

3. Non-Competition: Restrictions on seller's future activities and competition provisions

4. Installment Payments: Structure for payments over time if not paid in full at closing

Suggested Schedules

1. Share Certificate(s): Copies of certificates being redeemed

2. Board Resolutions: Company approvals for the redemption

3. Valuation Report: Independent valuation if required

4. Payment Schedule: Details of payment structure if installment payments are involved

5. Regulatory Approvals: Copies of any required regulatory clearances and compliance documents

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions


















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Relevant Industries
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Industries

Companies Act 2006 - Share Acquisition: Part 18 of the Companies Act 2006, specifically sections 658-737, governing limited companies' acquisition of their own shares and capital maintenance rules

Companies Act 2006 - Financial Assistance: Provisions regarding financial assistance for acquisition of shares, including restrictions and permitted circumstances

Financial Services and Markets Act 2000: Regulatory framework for financial promotions and securities trading rules that may impact share redemption processes

Corporation Tax Act 2010: Tax legislation governing the treatment of share buybacks and distributions, including tax implications for both company and shareholders

UK Listing Rules: Regulations applicable to listed companies regarding share buybacks and market notifications (if company is listed)

Market Abuse Regulation (MAR): European-derived regulations preventing market manipulation and insider trading during share buybacks

FCA Handbook: Financial Conduct Authority guidelines and requirements applicable to share redemption processes

Companies House Requirements: Filing requirements and documentation needed for registering share redemptions with the UK company registry

Directors' Duties: Common law and statutory duties of directors including duty to promote company success and exercise reasonable care

Contractual Interpretation Principles: Common law principles governing how redemption agreements will be interpreted by courts

Minority Shareholder Rights: Equitable principles protecting minority shareholders during share redemption processes

Articles of Association: Company's constitutional documents that may contain specific provisions regarding share redemptions

Shareholders' Agreements: Existing agreements between shareholders that may affect or restrict share redemption processes

Pre-emption Rights: Rights of existing shareholders to be offered shares before they are made available to others or redeemed

Corporate Governance Codes: Relevant governance guidelines that may affect the process and disclosure of share redemptions

Stamp Duty Regulations: Tax regulations regarding stamp duty implications of share transfers and redemptions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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