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Section 658 of the Companies Act 2006 (CA 2006) specifies that a limited company must not acquire its own shares, whether by purchase, subscription or otherwise, except in accordance with the provisions of CA 2006, Pt 18.

CA 2006, s 659 then provides various exceptions to this rule, in particular, permitting a limited company to ‘acquire any of its own fully paid shares otherwise than for valuable consideration’ (CA 2006, s 659(1)). Therefore, a company can acquire its own shares for no consideration (ie as a gift), provided that they are fully paid, and it does not need to follow the prescribed procedure set out in CA 2006, Pt 18 to do so.

Where a company has acquired its own shares for no consideration, they will not be treasury shares within the meaning of CA 2006, s 724 as they will not have been purchased in accordance with CA 2006, Pt 18, Ch 4 or out of distributable profits. Therefore, the provisions