Top 10 Practice Tips: Stock Repurchase Programs

This practice note provides a comprehensive overview of key considerations for legal counsel and companies implementing stock repurchase programs. It begins by contextualizing the rise in repurchase activity among U.S. public companies, particularly following tax reforms and despite public criticism post-COVID-19. It outlines the legal framework under Rule 10b-18 of the Securities Exchange Act, detailing the four conditions—manner, timing, price, and volume—that must be met to qualify for the safe harbor against manipulation claims. The document also discusses the implications of repurchases on insider trading, disclosure obligations under Regulation S-K, and the impact of the CARES Act on companies receiving government aid. It explores various repurchase structures, including open market repurchases and accelerated stock repurchase (ASR) programs, explaining their mechanics and regulatory nuances. Additional topics include board authorization requirements, potential conflicts with loan agreements, tax and accounting considerations, and the negotiation of repurchase agreements. The document emphasizes the importance of compliance with both federal and state laws, as well as the need for careful planning and documentation to mitigate legal and financial risks associated with stock buybacks.

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