What are treasury shares and what are their uses?
Treasury shares are the shares that the issuing company repurchases from the market and resells, or uses from its issued shares.
In accordance with the executive regulations of the Capital Markets Authority Law regulating securities activity, treasury shares are used in the following cases:
- Maintaining the stability of the company’s share price.
- Reducing the paid-up capital of the company.
- Company’s settlement of a debt in exchange for these shares.
- Paying off a company’s debt for the benefit of others.
- Distributing them to the company’s shareholders as bonus shares without entailing an increase in the capital or in the issued shares.
- Trade-offs in cases of merger and acquisition of other companies.
- Distributing all or part of it to the company’s employees within the employee stock option plan, subject to the approval of the company’s general assembly, and in accordance with the regulating rules approved by the company’s general assembly.
- Lending and borrowing for the purpose of market making.
- Any other cases determined by the Capital Markets Authority.
Non-listed companies may not dispose of their shares in the cases mentioned in the previous clauses (1), (3), (4) and (8).
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