Notice of Annual General Meeting 2008
Authority to repurchase ordinary shares
18. To authorise the Company unconditionally and generally for the purposes of Section 166 of the Companies Act 1985 (‘CA 1985’) to make market purchases (as defined in Section 163(3) of CA 1985) of ordinary shares of the Company and, where shares are held as treasury shares, to use them, inter alia, for the purposes of employee share plans operated by the Company, provided that:
(a) the maximum number of shares which may be purchased is 373,515,896;
(b) the minimum price (exclusive of all expenses) which may be paid is the 25p nominal value of each share;
(c) the maximum price (exclusive of all expenses) which may be paid for each ordinary share shall not be more than the higher of (i) 105% of the average of the middle market values of the Company’s ordinary shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the date on which the purchase is made and (ii) the price stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation (EC2273/2003);
(d) this authority shall expire at the conclusion of the Company’s AGM in 2009 or, if earlier, 30 June 2009 and is in substitution for all previous such powers, which shall cease to have effect from the date of this Resolution, without affecting the validity of any repurchase of shares already made or to be made under them; and
(e) during the period mentioned in (d) above the Directors can make offers and enter into agreements which would, or might, require the repurchase of shares after the expiry of such period and the Directors may make a purchase of shares in pursuance of such offer or agreement as if the authority conferred hereby had not expired.
Explanatory note: This annual Resolution renews the Company’s authority to purchase its own ordinary shares, subject to the limits set out above. The maximum number of shares will be 373,515,896, being 10% of the ordinary shares in issue as at 31 January 2008 and the Company’s exercise of this authority is subject to stated upper and lower limits on the price payable, as required by the UK Listing Authority. Shares will only be repurchased if earnings per share are expected to be enhanced as a result and it is in the best interests of shareholders generally. To the extent that any shares purchased are held in treasury (see below), earnings per share will be enhanced until such time, if any, as such shares are resold or transferred out of treasury.
The Company can either cancel shares which have been purchased or hold them as treasury shares (or a combination of both). The Directors believe that it continues to be desirable for the Company to have this choice. No dividends will be paid on, and no voting rights will be exercised in respect of, treasury shares. In 2007, 49,557,000 shares were purchased into treasury and 50,000,000 were cancelled. This Resolution also authorises the Company to transfer any treasury shares held by it for the purposes of its employee share plans. Treasury shares transferred for these purposes will, so long as required under the guidelines of the Association of British Insurers Investment Committee, count towards the limits in those plans on the number of new shares which may be issued. As at 31 January 2008 (being the latest practicable date prior to the publication of this Notice), there were 55,168,154 outstanding options granted under all share option plans operated by the Company which, if exercised, would represent 1.48% of the issued ordinary share capital of the Company. If this authority were exercised in full and the shares repurchased were to be cancelled, such options if exercised would represent 1.64% of the issued ordinary share capital of the Company.
By order of the Board
Harry F Baines
Company Secretary & Group Counsel
HBOS plc
The Mound
Edinburgh
EH1 1YZ
26 February 2008