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.
Register with AccountingWEB for free to read the rest of the article, which includes:
- Companies Act 2006
- Accounting issues
- Share buy-back at a premium
- Shares purchased out of a fresh issue of shares
- Permissible capital payments