ETASSUM23280 | Schedule 2 share incentive plan (SIP): Shares that may be awarded: Non-redeemable shares

Whether share capital is redeemable or not is a question to be determined by reference to the conditions and rights attaching to the shares concerned (as reflected by the Articles of Association) and is not affected by any agreement for the re-purchase of shares from a shareholder. The Companies Act clearly distinguishes between the power to issue redeemable Shares (Section 684 Companies Act 2006) and the power of a company to purchase its own shares (Section 690).

The requirement that eligible shares must not be redeemable does not apply to shares in a registered industrial or provident society which is a co-operative society (Paragraph 28(4)). It should be clear from a society’s rules that it is registered as both a co-operative and an industrial or provident society under the Industrial and Provident Societies Act 1965 or the Industrial and Provident Societies (Northern Ireland) Act 1969. If not, the society may be asked to provide further evidence of its registration under the appropriate Act by the Chief Registrar of Friendly Societies.