Companies Act 2014 section 1040

Treatment of own shares held by or on behalf of a PLC

Section 1040 sets out the rules governing what a public limited company (PLC) must do when it ends up holding, or having a beneficial interest in, its own shares in certain specified circumstances.

• A PLC that acquires a beneficial interest in its own shares — whether through forfeiture, surrender, direct acquisition, nominee purchase, or financially assisted purchase — must cancel those shares and reduce its share capital accordingly within the relevant period, unless it disposes of them first.
• If cancelling the shares would bring the PLC's allotted share capital below the authorised minimum, the company must apply to re-register as another type of company, such as a private company limited by shares.
• No voting rights may be exercised in respect of shares caught by these rules, and any purported exercise of such rights is void.
• Failure to cancel the shares or to apply for re-registration within the relevant period is a category 3 offence for both the PLC and any officer in default.