Special Resolution by Shareholders for Authorization of Share Buy-Back

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It is a formal decision made by the shareholders of a company at a General Meeting, authorizing the company to purchase its own shares from its members (a “buy-back”).

Under the Companies Act, 2015 (Kenya), a company cannot buy back its own shares unless:
- The Board of Directors first recommends it (through a Board Resolution), and
- The shareholders approve it by way of a Special Resolution (requiring at least a 75% majority of those present and voting).

Purpose of the Resolution:
- The law requires shareholder approval to ensure transparency and protection of minority shareholders, since buy-backs reduce share capital.
- It gives the company formal authority to purchase and cancel (or hold as treasury shares) its own shares in compliance with statutory rules.
- Shareholders confirm that the buy-back will not make the company insolvent and that only allowable sources of funds (profits, reserves, or fresh issue proceeds) will be used.
- It ensures that shareholders, not just directors, agree to a major decision affecting ownership, voting power, and capital structure.
- Provides documentary evidence for auditors, regulators, banks, or investors that due process was followed.

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Special Resolution by Shareholders for Authorization of Share Buy-Back

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