Top 10 Practice Tips: Stock Repurchase Programs

This practice note provides an overview of the principal considerations involved in designing, approving, and administering stock repurchase programs by U.S. public companies. It introduces the purpose and prevalence of share repurchases as a capital return mechanism and situates current market activity within a broader legal, regulatory, and political context. The discussion identifies the key federal securities law framework governing repurchases, including the role of Rule 10b-18 and its safe harbor, and notes the relevance of related regulatory regimes such as Regulation M and Rule 10b5-1. It addresses corporate governance and authorization matters, including board approval, capital considerations, and limitations arising from organizational documents, contracts, or state law. The document also surveys common structural approaches to repurchases, such as open-market programs, accelerated share repurchases, and tender offer–based alternatives and outlines how these structures operate at a high level. Disclosure and reporting obligations under SEC rules and stock exchange requirements are summarized, along with considerations related to securities issuances, insider activity, and market perceptions. In addition, the document highlights evolving political, regulatory, tax, and accounting developments affecting repurchase activity, as well as financing and covenant constraints. Finally, it describes the role and general features of repurchase agreements used to document and implement these programs.

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