5.03 Who bought the shares for the reward scheme: the market was told the company acquired them, but no buy-back return is on the register
UK Company C · an AIM-quoted scientific instruments group · Regulator-style question
In brief
The company announced that on [date] and [date] 'it acquired' [n] and [n] of its own shares ([n] on [date]) and allocated them at once to employees under the Company reward scheme; the statements of changes in equity show '[wording masked]'. If the company itself was the buyer, the Companies Act requires a return of the purchase within 28 days and a return when treasury shares are transferred to employees, and the directors' report must state the number, nominal value, consideration and reasons. None of these appears on the register or in either report. The question is whether the company or a trustee or nominee made the purchases.
The evidence, as filed
Further pages withheld to protect the company’s identity (two): Annual Report 2024, page 56; Annual Report 2025, page 56. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
Names, figures, dates, logos and any wording that could be searched back to the company are boxed out in grey; the point is highlighted in yellow.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Regulatory announcements say the company acquired [n] shares at [amount] ([date]), [n] shares at [amount] ([date]) and [n] shares at [amount] ([date]); no purchase-of-own-shares or treasury-transfer return is on the Companies House register; the 2025 and 2024 directors' reports say nothing about the purchases. | What the rule requires If the company was the buyer: a return of purchase of own shares within 28 days of delivery, a return of the transfer of the treasury shares to employees within 28 days, and a directors' report statement of the shares purchased (number, nominal value, consideration, reasons, % of called-up capital). If a trustee or nominee bought them: announcement and report wording that says so. |
The rule
Companies Act 2006 section 707(1)
Version relied on: Companies Act 2006, revised text on legislation.gov.uk as in force for the financial year reviewed
Where a company purchases shares under this Chapter, it must deliver a return to the registrar within the period of 28 days beginning with the date on which the shares are delivered to it.
Companies Act 2006 section 728(1)
Version relied on: Companies Act 2006, revised text on legislation.gov.uk as in force for the financial year reviewed
are transferred for the purposes of an employees' share scheme, the company must deliver a return to the registrar not later than 28 days after the shares are disposed of.
SI 2008/410 Schedule 7 Part 2 paragraph 9(a) (directors' report: company acquiring its own shares)
Version relied on: Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410), in force from April 2008, as amended (the directors’ remuneration report Schedule 8 as substituted from October 2013); revised text, legislation.gov.uk
the number and nominal value of the shares so purchased, the aggregate amount of the consideration paid by the company for such shares and the reasons for their purchase
Why it applies here: if the company bought the shares in the market (the resolutions passed at each AGM authorise market purchases), section 707 required a return within 28 days of delivery, and as the shares were not cancelled they were held in treasury and transferred for an employees' share scheme, which section 728 requires to be returned within 28 days; the directors' report statement in Schedule 7 Part 2 would also apply.
Why it matters
If the company was the buyer, two returns per purchase are missing from the register (an offence by every officer in default under sections 707(6) and 728(4)) and the directors' reports for 2024 and 2025 omit a required statement. If a trustee or nominee was the buyer, the announcements and the 'own shares' wording describe the buyer inaccurately.
Exposure
A question only. If the answer is that the company itself bought the shares, sections 707 and 728 make late returns an offence by officers in default (cured in practice by filing them late) and the directors' report omission can be corrected in the next report. No amount in the accounts changes.
Our workings
the announcements of [date], [date] and [date] each say that the Company 'acquired' its ordinary shares at a stated price and that the [wording masked]'. The 2025 report shows '[wording masked]' of [amount] in the statement of changes in equity and the cash flow statement (the same line in 2024). The Companies House filing history from [date] to [date] lists accounts, confirmation statements, director changes, resolutions, a charge and returns of allotment, but no return of purchase of own shares and no notice of a transfer of treasury shares. The directors' report (pp.56-57) has no paragraph on own shares; the 2024 directors' report is the same.
the 2025 purchases cost about [amount] and were [n] shares, about [n]% of the called-up capital (workings).
If an employee benefit trust or the scheme's nominee bought them with company funds, none of those duties applies, but the announcements then misdescribe the buyer. The public record cannot settle which, so this is put as a question.
| Purchase | Shares x price | £ |
|---|---|---|
| [date] | [n] x [n] | [n] |
| [date] | [n] x [n] | [n] |
| 2025 total | [n] + [n] | [n] (about [amount]) |
| Shares bought in 2025 | [n] + [n] | [n] |
| % of called-up capital at [date] | [n] / [n] | [n]% |
Management’s best defence, and our reply
The company can say the shares were bought through its broker by the trustee or nominee of the reward scheme and handed straight to employees, so the company never purchased or held its own shares and no return was due; the 'own shares' line follows the accounting that treats trust purchases as the company's own shares. It can also say the amounts are trivial (about [amount] a year) and fully announced to the market the same day. The answer: the announcements say in terms that the company 'acquired' the shares, and the register shows no return either way, so only the company can say which is true; the size is small, which is why this is low severity and a question.
The fix
- If the company bought the shares: file the returns of purchase (form SH03) and of the treasury transfers (form SH04) late, and add to the 2026 directors' report a paragraph such as 'During the year the Company purchased N ordinary shares of [amount] (x% of the called-up share capital) for £y [wording masked]; the shares were transferred to employees from treasury.' If a trustee bought them: say so in the next purchase announcement and in the equity note.
Question for the company
Who bought the [n] shares announced on [date], [date] and [date] (the company under its market purchase authority, or an employee benefit trust or the reward scheme's nominee), and if it was the company, why were the purchase and treasury-transfer returns not delivered to Companies House and the purchases not described in the directors' report?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The company announced that it acquired [n] shares on [date] | Document | |
| 2 | The shares were passed to employees at once (not cancelled) | Document | |
| 3 | Second 2025 purchase announced | Document | |
| 4 | The 2024 purchase announced in the same words | Document | |
| 5 | The filing history around the May-[date] purchases lists returns of allotment, resolutions and director terminations, but no return of purchase of own shares or of a treasury-share transfer | Document | |
| 6 | The 2025 cash flow statement shows the purchases as the company's own shares | Document | Annual Report 2025, page 68 |
| 7 | The directors' report share section deals only with significant shareholders | Document | Annual Report 2025, page 56 |
Absence check
- Document
- Annual Report 2025
- Where it would appear
- Significant shareholders
- What is missing
- a statement of the own shares purchased in 2025 (number, nominal value, consideration, reasons, percentage of called-up capital)
- Pages looked at
- p.56-57 (directors' report, pp.56-57) and the whole report text
- Result
- 'purchase of own shares' hits only p.67, [n] and [n] (the group and parent statements of changes in equity and the cash flow line '[wording masked]'), which give the amount but not the number, nominal value, reasons or percentage, and are not the directors' report; 'treasury' hits p.81 (the 'treasury method' in the earnings per share note) and p.90 ('treasury management' policies), unrelated; 'market purchase', 'shares purchased', 'reasons for their purchase' and 'buyback' do not hit.
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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