Do we need approval from creditors for the company to purchase its own shares?
If you are purchasing your own shares using distributable profits, you do not generally need approval from your creditors. However, creditors may have direct or indirect influence through your agreements with them. For example, your creditors might have the right to immediate repayment if your gearing ratio of debt to shareholders' funds exceeds a certain level - and purchasing your own shares might trigger this right.If you are purchasing shares out of capital, special rules apply to protect creditors. You must notify your creditors of your intention, directly or by advertising in both the London Gazette and a national newspaper. Your creditors will have five weeks after the resolution authorising the share purchase is passed to apply to the court to cancel the resolution and prevent the purchase.
