Cancellation of shares

All companies must notify ASIC if they cancel shares by completing a Change to company details (Form 484 - online).

Section 254Y of the Corporations Act 2001 requires a company to lodge a Form 484 within one month after the shares are cancelled, advising:

  • the number of shares cancelled; and

  • any amount paid by the company (in cash or otherwise) on the cancellation of the shares; and

  • if the shares are cancelled following a share buy-back, the amount paid by the company on the buy-back; and

  • if the company has different classes of shares, the class to which each cancelled share belonged.

Types Of Cancellation

Corporations Act 2001 Section References

Form Requirements

Other Reference Material

Redeemable Preference
A redeemable preference share is a preference share that is issued on the terms that it is liable to be redeemed. It may be redeemable:
(a) at the company's option; or
(b) at the member's option; or
(c) at a fixed time or on a specified date.

s254A
s254J-L

Change to company details (Form 484 - online). 
Section C to be lodged with ASIC within one month after the cancellation of shares.

 

Capital Reductions
A reduction of share capital occurs when any money paid to a company in respect of a member's shares is returned to the member.

s256A – s256E

 

Information sheet: Reduction in share capital

Equal Reduction
An Equal Reduction:
(a) relates only to ordinary shares; and
(b) applies to each holder of ordinary shares in proportion to the number of ordinary shares they hold; and
(c) the terms of reduction are the same for each holder of ordinary shares.

s249H(1)
s249(HA)(1)

 

Form 2560 – Notification of reduction in share capital details – to be lodged with ASIC at least 28 days before the members' meeting of a public listed company (or 21 days for a company other than a public listed company)

Change to company details (Form 484 - online).
Section C to be lodged with ASIC within one month after the cancellation of shares.

Information Sheet: Company (including special) resolutions

Selective Reduction
A Selective Reduction is a share capital reduction which doesn't meet the criteria of an Equal Reduction.

s249H(1)
s249(HA)(1)

 

Form 2560 – Notification of reduction in share capital details – to be lodged with ASIC at least 28 days before the members' meeting of a public listed company (or 21 days for a company other than a public listed company)

Information Sheet: Company (including special) resolutions

s256(C)(3)

Form 2205 – Notification of resolutions regarding shares– to be lodged with ASIC within 14 days after passing the resolution. The company must not make the reduction until 14 days after lodgement

Change to company details (Form 484 - online).
Section C to be lodged with ASIC within one month after the cancellation of shares.

Forfeited Shares
A company may, by resolution passed at a general meeting, cancel shares that have been forfeited under the terms on which the shares are on issue.

s258D

Change to company details (Form 484 - online).
Section C to be lodged with ASIC within one month after the cancellation of shares.

 

Other Share Cancellations
Other capital reductions that will be authorised by the Act include:

  • The cancellation of the issue of a share incidental to a take-over (s651C)
  • A disclosure notice condition not met or defective (s724(2), 737, and 738)
  • A Court order under s1325A
  • Provisions of s258E
  • Shares cannot be cancelled unless the reason for the cancellation is covered under the Corporations Act 2001

s258E, 651C, 724(2), 737, 738

Change to company details (Form 484 - online).
Section C to be lodged with ASIC within one month after the cancellation of shares.

 

Share Buy-backs
A 'buy back' involves a company reclaiming issued shares by purchasing them from existing members

s257A-J

Form 280 – Notification of share buy-back details - to be lodged with ASIC before the notice of meeting is sent to members. ASIC must be given at least 14 days notice before a resolution is passed or a buy-back agreement is entered into.

Form 281 – Notice of Intention to carry out a share buy-back– to be lodged with ASIC where the company wants to have less than 14 days between lodging the Form 280 or entering into the buy-back agreement.

Change to company details (Form 484 - online).
Section C to be lodged with ASIC within one month after the cancellation of shares.

Information sheet: Share buy-backs

More information

Shares

Share buy backs

Reduction in share capital

Members

This is Information Sheet 15 (INFO 15). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

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Last updated: 19/08/2013 12:00