25.6 BUYBACK OF SHARES
Many smaller companies do a buyback of shares instead of paying a dividend for obvious reasons. In the case of the buyback of shares that constitutes more than 5% of a share capital class this falls within the definition s 48 (8) (b) of an affected transaction and s 114 and s 115 kick in with full TRP compliance being necessary where the company is regulated, despite the size of the company. The Companies Act 2008 does not differentiate between large and small companies as far as s 114 is concerned. On the face of it, it seems that even small companies have to comply with expensive administration in that they have to appoint an independent expert.
S 48 (8) (b) says that subject to the requirements of s 114 and s 115, if considered alone or together in a series of buy back transactions which amount to more than 5% of any particular class of share capital then this transaction has to be conducted in terms of s 114 and s 115. This means that it falls within the definition of an affected transaction, which also means that if it is a private company the private company, could very well become classified as a regulated company.