Released 13 December 2004. Comment closed 16 February 2005.

We give case-by-case relief under the Corporations Act 2001 (Act) so that a company can buy back a small parcel of shares from each shareholder (small parcel). We seek your comments on our proposed maximum value of a small parcel for these purposes. Our relief is from the requirement for the company to obtain a special resolution approving a selective buy-back: s257D. A buy-back of a small parcel is selective primarily because the small parcel represents a different percentage of the holding of each shareholder.

Usually the company buys back small parcels as part of a larger buy-back involving a scale-back mechanism. If a company wants to buy back a specific percentage or dollar value of its shares, and shareholders tender more than the amount the company wishes to buy, the company proportionately scales back the amount bought from each shareholder. The proportional scale-back of tendering shareholders generally occurs only after the company has bought back small parcels.

This document is not in ASIC’s usual format for consulting on policy proposals (i.e. a policy proposal paper). This reflects the discrete and technical nature of these policy proposals.

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