It is not uncommon to hear of companies purchasing their own shares from shareholders, explains Steve Collings.
Typical scenarios include shareholders who wish to sell their shares in a company where other shareholders may not wish to buy them or where the shareholders are unable to raise the cash to purchase them.
The accounting for such buy-backs can be tricky and there is a whole host of legalities to consider - some of which are obvious whereas others not so. This article will take a look at how the mechanics of accounting for such buybacks works and the legal considerations that should be made.
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- Companies Act 2006
- Accounting issues
- Share buy-back at a premium
- Shares purchased out of a fresh issue of shares
- Permissible capital payments
About Steven Collings
Steve Collings, FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd where Steve trained and qualified.