Share buyback process workflow
Part 2J.1 sets a strict sequence for capital reductions and buybacks. The category of buyback drives the member approval threshold, the disclosure package, and the 10/12 months limit; get the category wrong and the buyback is invalid.
This is an 8-step workflow for a share buyback by an Australian proprietary or unlisted public company under Part 2J.1 of the Corporations Act 2001 (Cth). It covers each buyback type — selective, equal access, and employee share scheme — plus solvency, member approval, and ASIC lodgement.
Before you start
- Signed costs agreement and conflict check
- Up-to-date financial statements and solvency evidence
- Company constitution and shareholders agreement
- Instructions on buyback category, consideration, and counterparty
The workflow
Select the correct buyback category
Identify the buyback category — equal access, selective, employee share scheme, on-market, or minimum holding. Each category has its own approval threshold and disclosure package.
Apply the 10/12 months limit
Test whether the buyback falls within or outside the 10/12 months limit — 10% of the smallest number of votes attached to voting shares in the last 12 months. Buybacks within the limit have simplified procedure.
Check constitution and shareholders agreement
Check the constitution permits the buyback (or amend by special resolution) and that no shareholders agreement pre-emptive right or veto is triggered.
Prepare solvency resolution and statement
Directors prepare a resolution that the buyback does not materially prejudice the company's ability to pay its creditors, supported by cashflow and solvency analysis.
Prepare member approval documents
Prepare the notice of meeting, explanatory memorandum, and buyback documents. For selective buybacks, apply the special resolution threshold (75%) with selling shareholders excluded from the vote.
Lodge with ASIC before dispatch and again before buyback
Lodge the notice and supporting documents with ASIC at least 14 days before dispatch to members (where required) and again before the buyback agreement is entered into.
Hold the meeting and execute the buyback agreement
Hold the members' meeting, pass the required resolutions, execute the buyback agreement with the selling shareholder, and pay the consideration.
Cancel shares and update ASIC and registers
Cancel the bought-back shares, update the members' register, lodge Form 484 within 28 days, and update the cap table and any shareholders agreement schedules.
What you will have at the end
A completed buyback with cancelled shares, updated member register, lodged ASIC forms, and a paper trail evidencing solvency and member approval under Part 2J.1.
Common issues
- Selling shareholder allowed to vote on a selective buyback resolution
- Solvency resolution treated as a formality without supporting cashflow
- Buyback consideration paid before member approval obtained
- Employee share scheme buyback applied outside the ESS concession
- Tax treatment (dividend component vs capital component) not analysed
Run this workflow on a real matter
Quillio drafts the notice of meeting, solvency statement, buyback agreement, and ASIC forms — plus a category-specific compliance checklist. See /practice-areas/commercial-lawyers or start a free trial at /free-trial.
General guide only — not legal advice. Buybacks have significant tax consequences (ITAA 1936 s 159GZZZP); obtain specialist advice.
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