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Companies Ordinance Cap 32

Section Num: 49BA     Version Date 13/02/2004

Requirements for listed company to purchase own shares

(1) A listed company may purchase its own shares-

(a) subject to subsections (2), (3) and (7), under a general offer;

(b) subject to subsections (2), (3) and (4), on a recognized stock market or on an approved stock exchange;

(c) subject to subsections (5) and (6), otherwise than on a recognized stock market or on an approved stock exchange, and otherwise than under a general offer referred to in paragraph (a).  (Amended 5 of 2002 s. 407)

(2) A listed company shall not-

(a) make a general offer under subsection (1)(a) unless the proposed general offer is authorized by the company in general meeting; or

(b) purchase any of its own shares on a recognized stock market or on an approved stock exchange under subsection (1)(b), unless the proposed purchase is authorized by the company in general meeting.  (Amended 5 of 2002 s. 407)

(3) A listed company shall include together with the notice of any general meeting called for the purpose of subsection (2)-

(a) in the case of a general offer under subsection (1)(a)-

(i) a copy of the document containing the proposed general offer;


(ii) a statement, signed by the directors of the company,

containing such particulars as would enable a reasonable person to form as a result thereof a valid and justifiable opinion as to the merits of the proposed general offer; and

(b) in the case of a purchase under subsection (1)(b), a memorandum of the terms of the proposed purchase.

(4) An authorization given by a company in general meeting under subsection (2)(b) shall be valid for the period expiring on the date of the next annual general meeting of the company and such period may be extended by the company at such annual general meeting until the date of the next annual general meeting of the company.

(5) A listed company shall not make a purchase of any of its shares under subsection (1)(c) unless the proposed purchase has been authorized by a special resolution of the company and section 49D(4) shall apply to such a resolution as it applies to a resolution under that subsection.

(6) A listed company shall include together with the notice of any meeting called for the purpose of subsection (5)-

(a) where the proposed purchase agreement is in writing, a copy of the proposed purchase agreement; or

(b) where the proposed purchase agreement is not in writing, a memorandum of the terms of the proposed purchase agreement; and

(c) a statement, signed by the directors of the company, after having made due and diligent inquiry of the members of the company holding the shares to which the proposed purchase agreement relates, containing such particulars as would enable a reasonable person to form as a result thereof a valid and justifiable opinion as to the merits of the proposed purchase agreement.

(7) If, in the case of a general offer under subsection (1)(a), a member of the company may be compelled to dispose of his shares under section 168B-

(a) the company shall appoint an independent investment adviser to advise members who may be affected by the compulsory disposal on the merits of the proposed general offer; and

(b) the proposed general offer shall be authorized by a special resolution of the company, on which no relevant shareholder votes and for this purpose-

(i) a relevant shareholder shall be regarded as voting not only if he votes on a poll on the question whether the resolution shall be passed, but also if he votes on the resolution otherwise than on a poll;

(ii) notwithstanding anything in the company's articles, any member of the company may demand a poll on that question; and

(iii) a vote and a demand for a poll by a person as proxy for a relevant shareholder are the same (respectively) as a vote and demand by a relevant shareholder.

(8) A person shall not be appointed as an investment adviser under subsection (7) unless he is a corporation licensed to carry on, or an authorized financial institution registered for carrying on, a business in advising on securities or advising on corporate finance under Part V of the Securities and Futures Ordinance (Cap 571) and is neither-  (Amended 5 of 2002 s. 407)

(a) a member, officer or employee of the company making the general offer or of a related company thereof; nor

(b) a related company of the company making the general offer.

(9) For the purposes of this section- "approved stock exchange" means a stock exchange approved, by notice published in the Gazette, for the purposes of this section by-

(a) the Commission; and

(b) the recognized exchange company that operates the recognized stock market on which the shares concerned are listed;  (Added 5 of 2002 s. 407)

"general offer" means an offer to all members of a company or to all members holding shares of a particular class in a company, other than any members residing in a jurisdiction where such an offer is contrary to the laws of that jurisdiction, on terms which are the same in relation to all such shares or in relation to the shares of each class;

"related company" in relation to a company, means any company that is the company's subsidiary or holding company or a subsidiary of that company's holding company;

"relevant shareholder" means a person to whom the description

"relevant shareholder" in the Thirteenth Schedule applies.

(10) In the application of the definition of "officer" in section 2(1) to subsection (8), "director" includes-

(a) any person occupying the position of director, by whatever name called; and

(b) a shadow director.  (Replaced 28 of 2003 s. 19)

(11) The Commission may exempt any listed company from any of the provisions of this section, subject to such conditions as it thinks fit.

(12) The Commission may-

(a) suspend or withdraw an exemption granted under subsection (11) on the ground that the conditions subject to which the exemption was granted have not been complied with or on such other ground as the Commission thinks fit; or

(b) vary any condition imposed under subsection (11).

(Added 77 of 1991 s. 4. Amended 86 of 1992 s. 10; 5 of 2002 s. 407)

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