10/12 limit | Practical Law (2024)

In the context of a share buy-back, a company should determine its 10/12 limit as follows:

• Total the following:

  • the number of voting shares bought back during the 12 months before the date of the proposed buy-back; and

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  • the number of voting shares it intends to buy back under the proposed buy-back.

• Ascertain the number of votes attached to the above shares.

  See Also

  How to apply for buybacks, takeovers and delistings at Zerodha?

The 10/12 limit will be exceeded if the total number of votes attaching to the aggregate would exceed 10% of the smallest number, at any time during the last 12 months, of votes attaching to the voting shares of the company.

If the 10/12 limit is exceeded, the company's shareholders must approve the buy-back in general meeting. The exception to this is a selective buy-back, which requires shareholder approval regardless of whether or not it exceeds the 10/12 limit.

For more information, see Practice notes:

• Share buy-backs: ASX listed companies: The 10/12 limit.

• Share buy-backs: unlisted companies: The 10/12 limit.