Ken Moody suggests an alternative to a company purchase of own shares in certain circumstances where relations between shareholders have become strained.
There is a well-trodden alternative to a company purchase of own shares (PoS) where relations between shareholders have become strained and the company does not have sufficient cash or reserves for an immediate outright buyback.
The two main alternatives for a PoS by an unquoted company in the above circumstances are a phased buyback or a multiple completion contract. A PoS is a distribution for both income tax and company law purposes, but where the requirements of CTA 2010, ss 1033-1042 are met the PoS is treated as a capital gains tax (CGT) disposal. HMRC clearance may be applied for under CTA 2010, s 1044, for which essential guidance is provided by Statement of Practice 2/82.