Can a company buy its own shares?

Can a company buy its own shares?

March 26, 2019

 By virtue of Sec 160 Companies and Allied Matters Act 2004, A company is not allowed to buy shares issued by it unless in the following circumstances or events;

  1. If the company is settling or compromising a debt or claim asserted by or against the company.
  2. If the company is eliminating fractional shares
  3. If the company is fulfilling the terms of a non-assignable agreement under which the company is obliged to purchase shares owned by an officer of the company
  4. If the company is satisfying the claim of a dissenting shareholder
  5. If the company is complying with a court order.

Conditions for purchase;

  • The shares shall only be purchased out of the profits of the company or the proceeds of a fresh issue of shares made for the purpose of the purchase
  • Redeemable shares shall not be purchased at a price higher than the lowest price at which they are redeemable.

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