Limitations to share buybacks
Suppose that the European Commission (hereafter, the “Commission”) is considering
amendments to its framework to remove any existing limitations to share buybacks, similarly to what already happens in the United States. The Commission retains you as legal and policy advisor in charge of the dossier, and asks for your expertise on the following issues:
1. Which act(s) and which specific provision(s) of the existing legal framework should the Commission amend?
2. What are the advantages and disadvantages of removing limits to share buybacks? More specifically, is there any particular risks associated with eliminating the requirement that buybacks should not exceed 10% of the subscribed capital?
3. Taking into accounts the advantages and disadvantages that you identified in no. 2. above, what is your technical advice for the Commission (i.e., to amend or not to amend?) and why?
