Form SH05 UK: Cancel Treasury Shares (2026 Guide)

At a glance

• Filing deadline: SH05 must reach Companies House no later than 28 days after the date the treasury shares are cancelled (Companies Act 2006, s.730).
• Who decides: The directors can cancel treasury shares at any time — no shareholder resolution is needed for the cancellation itself, and it is expressly exempt from the normal capital-reduction procedure (s.729(5)).
• What must go with it: A statement of capital showing the company's issued share capital immediately after cancellation (s.730(4)-(5)).
• Filing fee: None currently listed for SH05 — always check the current position on GOV.UK.
• Private companies: Have been able to hold and cancel treasury shares since 30 April 2013, when SI 2013/999 extended the regime beyond public companies.
• Wrong form risk: If shares are cancelled immediately on buyback (never actually held in treasury), the correct form is SH06, not SH05 (s.708).
• Consequence of missing the deadline: A criminal offence under s.730(6)-(7) — a fine for the company and every officer in default.

What are treasury shares?

Treasury shares arise when a limited company buys back its own shares out of distributable profits and, instead of cancelling them straight away, chooses to hold onto them. This is governed by section 724 of the Companies Act 2006. While the shares sit in treasury, the company itself must be entered in its register of members as the shareholder — but it gets none of the usual benefits of share ownership.

Section 726 is explicit on this point: the company must not exercise any right attached to the treasury shares, and any purported exercise of such a right is void. That covers voting at meetings and receiving dividends or any other distribution. The only things that can still happen to treasury shares are an allotment of fully paid bonus shares in respect of them, or payment on redemption if they are redeemable shares.

From that point, the company has essentially three options for the shares: keep holding them, sell or transfer them (using form SH04), or cancel them (using form SH05, which this guide covers).

Private companies can hold treasury shares too

Treasury shares were originally a facility limited to public companies. That changed on 30 April 2013, when The Companies Act 2006 (Amendment of Part 18) Regulations 2013 (SI 2013/999) came into force and extended the regime in Chapter 6 of Part 18 to all limited companies that buy back shares out of distributable profits. If your company bought back shares before that date and cancelled them immediately because treasury wasn't available to it, that history doesn't affect a private company's ability to use treasury shares — and SH05 — today.

Cancelling treasury shares: the directors' decision

Once shares are sitting in treasury, section 729 gives the company — acting through its directors — the power to cancel some or all of them at any time. Two points matter here:

1. No shareholder resolution is generally required for the cancellation itself. The original buyback that put the shares into treasury will already have needed proper shareholder authorisation. The later decision to cancel does not need a fresh resolution unless the company's own articles of association impose one.
2. The normal capital-reduction procedure doesn't apply. Reducing share capital usually falls under Chapter 10 of Part 17 of the Companies Act 2006, which for a private company typically means a special resolution supported by a solvency statement, or a court-approved reduction. Section 729(5) specifically exempts cancellation of treasury shares from that chapter, so the directors can act without going through it.

In practice, the decision should still be recorded properly: clear board minutes noting the class, number and nominal value of the shares being cancelled, and — critically — the effective date of cancellation, since that date starts the 28-day filing clock under section 730.

Once cancelled, the shares are permanently removed from the company's issued capital. Under section 729(4), the company's share capital is reduced by the aggregate nominal value of the cancelled shares.

Filing form SH05: what the notice must contain

Section 730 sets out exactly what the SH05 return has to say. For each class of shares cancelled, it must state:

• the number and nominal value of the shares, and
• the date on which they were cancelled.

Particulars of shares cancelled on different dates can be included in a single return, so a company that cancelled treasury shares in two tranches doesn't need to file twice — provided both cancellations are captured accurately in the one form.

The statement of capital

SH05 must be accompanied by a statement of capital covering the company's issued share capital immediately following the cancellation. Under section 730(5), that statement must set out:

• the total number of shares of the company;
• the aggregate nominal value of those shares;
• the aggregate amount (if any) unpaid on those shares, whether on account of nominal value or by way of premium; and
• for each class of shares, the prescribed particulars of the rights attached, the total number of shares in that class, and the aggregate nominal value of that class.

The current version of the form (SH05, version 8.0) mirrors this structure directly — it has a dedicated statement-of-capital section with currency tables for each class of share and a field for the total aggregate amount unpaid, which you can enter as "0" or "nil" if the shares are fully paid (Companies House will assume they are fully paid if the field is left blank).

If shares are cancelled immediately on buyback: form SH06, not SH05

SH05 only applies to shares that were genuinely held in treasury before a later cancellation decision. Section 708 deals with a different scenario: shares that are cancelled forthwith on acquisition by the company, whether because treasury shares don't apply at all or because the company chose to cancel immediately rather than hold in treasury. In that case, the 28-day notice obligation arises under section 708, not section 730, and the form to use is SH06 (Notice of cancellation of shares) — filing SH05 for an immediate cancellation is the wrong form and will not satisfy the section 708 obligation.

How to file SH05

1. Confirm the buyback and treasury holding were lawful. Check the original purchase was made out of distributable profits under the relevant rules in Part 18, and that the shares have genuinely been sitting in treasury (not cancelled immediately, which would need SH06 instead).
2. Have the directors resolve to cancel. Record the class, number and nominal value of shares to be cancelled and the effective cancellation date in board minutes.
3. Update internal records. Amend the register of members, any share certificates, and internal capital tables so they match the reduced position before you file.
4. Complete form SH05. Enter the company name and number, the class of shares cancelled, the number and nominal value, and the date(s) of cancellation.
5. Complete the statement of capital. Fill in the post-cancellation position for every class: total shares, aggregate nominal value, any amount unpaid, and the prescribed particulars of rights.
6. File within 28 days of the cancellation date. SH05 can be posted to the relevant Companies House address, or completed as a PDF and uploaded through the Companies House "Upload a document" service, provided it is signed and under the 4MB size limit.
7. Keep the filed copy and any confirmation with the company's statutory records.

Worked example: two cancellation dates, one return

A private limited company holds 40,000 ordinary shares in treasury after an earlier buyback. On 3 March, the directors resolve to cancel 15,000 of them. On 20 March, they resolve to cancel a further 10,000. Both cancellations can go on the same SH05 return, listing the two dates and the number cancelled on each, provided the single return is filed within 28 days of the earlier cancellation date — in this example, no later than 31 March. Filing on 1 April would put the 3 March tranche outside the 28-day window even though the 20 March tranche would still be within time, so in practice the safer approach is to file by reference to the earliest date in the batch.

Practical points before you file

• Check which form you actually need. SH04 is for selling or transferring treasury shares, SH05 is for cancelling shares already in treasury, and SH06 is for shares cancelled forthwith on buyback. Filing the wrong one will be rejected or simply won't satisfy the underlying legal obligation.
• Diarise the deadline from the cancellation date, not the date the board meeting is minuted or the form is drafted.
• Don't assume a shareholder resolution is needed for the cancellation — it usually isn't, but check the articles of association for any company-specific requirement.
• Get the statement of capital right first time. An incomplete or inconsistent statement of capital is one of the most common reasons Companies House rejects share capital filings.
• Coordinate with your accountant on the capital and reserves entries that follow cancellation, since the accounting treatment depends on the specific facts of the original buyback.

This guide provides general information about form SH05 and the cancellation of treasury shares under the law of England and Wales. It is not legal advice and is not a substitute for advice tailored to your company's specific circumstances. The law described was accurate as at August 2026 and is subject to change — always check GOV.UK and legislation.gov.uk for the current position before filing.

Last reviewed: August 2026 by a non-practising solicitor · Next review due: August 2027 or on legislative change.