Substantial shareholder meaning

STOP PRESS: The Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) obtained Royal Assent on 26 October 2023. Part 1 of ECCTA 2023 introduces a substantial suite of measures that strengthen the role of Companies House and promote greater transparency across UK corporate entities. The Act will be brought into effect in phases over an extended timeframe. Numerous provisions will depend on detailed secondary legislation and accompanying guidance, alongside the development and rollout of new technical systems, processes and tools to implement the reforms. For further information, see Practice Notes: The Economic Crime and Corporate Transparency Act 2023—what Banking & Finance lawyers need to know, The Economic Crime and Corporate Transparency Act 2023—tracker, and Corporate transparency reform—changes to company registers. What are a company's constitutional documents?...

STOP PRESS: A major, wide-ranging overhaul of the UK listing framework took effect on 29 July 2024, abolishing the premium and standard listing segments and introducing a unified category for equity shares of commercial companies. That commercial companies category is strongly disclosure-led and sits alongside other listing categories, including the shell companies, secondary listing and closed ended investment fund categories. A new UK Listing Rules sourcebook commenced to deliver these reforms, and the previous Listing Rules sourcebook was withdrawn at the same time. For more detail, see Practice Note: Reform of the UK listing regime—fundamentals for guidance. This Checklist represents the listing regime as it existed before 29 July 2024. A limited company may acquire its own shares if certain conditions set out in the Companies Act 2006 (CA 2006) are satisfied under that statute. This is commonly referred to as a share buyback or a purchase of own shares. In addition to the provisions of the CA 2006, further rules and guidelines are relevant to a listed company...

A limited company can repurchase its own shares where the requirements of the Companies Act 2006 (CA 2006) are met. This is termed a share buyback, or a purchase of own shares. Beyond the CA 2006, additional rules and guidance are relevant to a listed company or an AIM company. A private limited company may only carry out an off‑market buyback; accordingly, this checklist does not cover on‑market buybacks. For an overview of share buybacks, including how off‑market and on‑market buybacks differ, see Practice Note: Share buybacks—the legal framework. Preliminary issues Before proceeding with a buyback, a private limited company should work through several preliminary points and may need to complete certain preparatory steps. For more detail, see Practice Notes: Private company share buybacks—initial considerations and Tax issues on share buybacks for corporate lawyers. Articles of association and shareholders' agreements: Check that the company’s articles provide the necessary power to undertake the proposed buyback...

In this issue: Company law and regulatory matters Corporate governance Tax treatment Useful information Trackers Dates for your diary Weekly highlights from other practice areas Company law and regulatory matters Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025 published The Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025 (SI 2025/439) have been issued and will take effect on 11 May 2025, having previously been laid for sifting last month (see News Analysis: Share Incentives weekly highlights—6 March 2025—Company law and regulatory matters). They remove most of the 2019 reporting obligations imposed on quoted companies in relation to directors’ remuneration, introduced to implement aspects of EU Directive 2017/828 (the revised Shareholder Rights Directive). This change reflects substantial overlap with pre‑2019 UK rules on directors’ pay reporting that remain in force and continue to apply. The instrument also updates the audit regulatory framework to address inconsistencies identified by the government and the Financial Reporting Council, which arose during...

Original news Re Pro4Sport Ltd (in Liquidation); Subnom Hedger (Liquidator of Pro4Sport Ltd) v Adams [2015] EWHC 2540 (Ch), [2015] All ER (D) 12 (Sep) The Chancery Division rejected a misfeasance application brought by the company’s liquidator under IA 1986, s 212 against the respondent, who had formerly been a director and the majority shareholder. The court concluded, among other points, that the allegation under CA 2006, s 172 did not succeed, and the respondent had not contravened his duty of care and skill under CA 2006, s 174... What was the background to the application? In 2012, shortly before Pro4Sport Ltd entered creditors’ voluntary liquidation, its director and majority owner arranged for the company to dispose of its assets to an associated entity, Pro4Sport.co.uk (Pro4), for deferred consideration of £56,400. The sole protection taken was a retention of title provision. Pro4 remitted £35,910 towards the price before itself entering creditors’ voluntary liquidation in 2014. The liquidator then pursued misfeasance proceedings against the director under IA 1986,...

Hinton and another (as joint administrators of Kession Capital Ltd) v KVB Consultants Ltd (Company Number 08723839) and others [2026] EWHC 785 (Ch) What was the background? Kession Capital Ltd’s joint administrators (the company being in administration) sought directions from the High Court, before Deputy ICC Judge Curl KC, invoking IA 1986, Sch B1, paras 53, 55 and 63. The step followed creditors’ rejection of proposals put forward under IA 1986, Sch B1, para 49(1). They asked the court to ‘hold the ring’ by keeping the company in administration until a Supreme Court appeal on another issue was determined, with a further meeting of creditors thereafter. Twenty‑six unconnected judgment creditors opposed the application. When administration commenced, the company was insolvent and not trading. Its move into administration came after enforcement action by a substantial judgment creditor, Mr Venkiteswaran. The administrators’ proposals adopted the objective in IA 1986, Sch B1, para 3(1)(c)—realisation for distribution to secured or preferential creditors—relying upon a preferential claim of £800 owed to the director...

If a company undertakes a share buyback itself, or via an intermediary acting as the company’s agent, the usual tax position for a UK-resident shareholder is that the transaction is regarded, for UK tax purposes at the time of repurchase, as both: a disposal of their shares for chargeable gains purposes, and the receipt of an income distribution Beyond that, the precise treatment differs slightly according to whether the shareholder is an individual or a corporate owner. For further detail on these differences, see Practice Notes: Tax consequences of share buybacks—main rules and Tax consequences of share buybacks—calculating the income capital split. However, special provisions can apply to repurchases by certain unquoted companies. These rules can prevent any of the consideration from being treated as a distribution in the hands of a particular UK-resident shareholder. Under those provisions, the whole sum received by that shareholder is treated as disposal proceeds for CGT/corporation tax on chargeable gains purposes. The comparative advantages of this—ie...

Project documents This Practice Note offers an overview of several widely used agreements and papers in a PFI/PF2 scheme, though the precise suite adopted will turn on the particular project. In the 2018 Budget (delivered on 29 October 2018), the government stated that PF2 will not be used for new schemes (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). That said, existing PFI and PF2 arrangements will remain in operation and, given the usual term of such projects, are expected to continue for many years... Project Agreement This is the core contract in any PFI arrangement. It records the full set of terms and conditions governing the relationship between the Authority and Project Co/SPV for the life of the project. Where Project Co/SPV is granted a concession (ie the exclusive right to supply/operate/exploit something to create third party revenue), the Project Agreement may be described as a concession agreement. Typically a substantial document, it is often divided into multiple sections for manageability. Under...

In certain corporate takeovers, the purchaser may arrange the deal so that the price is satisfied by issuing new shares and/or loan notes in the acquiring company. Rather than, or in addition to, receiving cash, the vendor shareholders swap their existing shares (or loan notes) for fresh shares and/or loan notes created by the corporate buyer. This Practice Note explains the tax consequences for the selling shareholders and the acquirer in such arrangements. It covers both parties’ positions under the relevant tax rules. This method of acquisition plainly offers a cash flow benefit to the buyer and, provided specific conditions are met, the securities exchange is also treated as a reorganisation for tax purposes. Consequently, no capital gains tax (or corporation tax on chargeable gains) is due from the selling shareholders at the point they dispose of their shares. Where the consideration comprises a mixture of cash and shares and/or loan notes issued by the buyer, no tax is payable to the extent that the consideration consists of those shares...

Power of attorney—private M&A—share purchase—signing—individual seller 1 Appointment and powers I, [insert seller’s name] of [insert address], on [insert date] appoint [jointly and/or severally] [insert name(s) of attorney] of [insert address(es)] as my lawful attorney(s) to act for me regarding the proposed sale of [the entire/a substantial part/[insert %] per cent of the] issued share capital of [insert target company name] to [insert the buyer name] or its nominee (the Proposed Sale). The attorney may approve, execute and sign any deed, agreement, letter, consent or other document required in my capacity as shareholder, including the SPA, the Disclosure Letter, the Tax Covenant and any [lost share certificate indemnity], [pre-emption waiver] or [stock transfer form(s)]; manage shareholders’ meetings and proxies; [grant or withhold consents and sign resolutions]; and [on Completion appoint the Buyer as my attorney until registration as holder of the Shares]. The attorney may delegate to an agent (without onward delegation) and appoint or remove a substitute; I ratify lawful acts and indemnify the attorney; this...

1 Appointment and powers We, [insert company name], incorporated in [England and Wales OR other] under no. [insert] (the Company), appoint on [insert date] [jointly and/or severally] [insert attorney name(s) and address(es)] to act for the Company regarding the proposed sale of [the entire/a substantial part/[insert]%] of the share capital of [insert target company name] to [insert buyer name] (the Proposed Sale). Approve, sign, seal and deliver any documents the Attorney considers necessary, including the SPA, [lost share certificate indemnity], [pre‑emption waiver], [stock transfer forms], the Disclosure Letter, [Tax Covenant] and [other documents]. Call, waive notice of, attend and vote at shareholder meetings; appoint proxies; give or withhold consents; and, on Completion, appoint the Buyer as attorney until the Buyer or its nominee is registered. Undertake any steps necessary or desirable to complete the Proposed Sale. Delegate to an agent (with no power to sub‑delegate) and appoint, remove or revoke a substitute [with/without power of substitution]. The Company ratifies lawful acts and...