A share buyback (rachat d'actions, share repurchase) is a transaction in which a company purchases its own shares from the market or directly from shareholders, reducing the total number of shares outstanding. It is one of the two primary mechanisms for returning cash to shareholders (alongside dividends) and is often preferred for its tax efficiency in certain Franco-Swiss structures — capital gains are taxed more favorably than dividends in Switzerland for individual shareholders, and share buybacks avoid the triggering of withholding tax that a dividend distribution would generate.

Under French law (Articles L. 225-206 et seq. of the Commercial Code), buyback programs for SA/SAS companies must be authorized by the general assembly, typically covering up to 10% of share capital over 18 months. Repurchased shares can be cancelled (capital reduction), held as treasury shares (maximum 10%), or allocated to employee share plans (BSPCE, stock options, AGA). For unlisted companies, a share buyback from an exiting shareholder is often used as an alternative to a third-party sale when the shareholders' agreement (agrément) cannot be obtained.

In Switzerland (Articles 659 et seq. CO), a SA may repurchase up to 10% of its own share capital without general assembly approval. For unlisted Swiss companies, share buybacks are commonly used in OBO structures — the company buys out the founder's stake, financed by debt, effectively creating a self-financed LBO. The Swiss tax authority may requalify the buyback as an indirect partial liquidation if the company has significant undistributed reserves, triggering withholding tax on the distribution portion.

At Hectelion, we structure and value share buyback transactions in Franco-Swiss SMEs, integrating tax and corporate law constraints in our structuring and valuation mandates.