Share buyback

Company is bound to maintain its share capital as a source of payment to creditors and shareholders' expectations that capital will be used for object of company.

Section 67(1) provides that a company cannot purchase its shares unless:

a) It is a redeemable share

b) It is share buyback. For public listed companies through stock exchange.

A company buy back its shares for the following reasons:

1. Capital mobility

2. Shares price is undervalued

3. Defense for non-beneficial takeover

4. Company has greater control over its equity.

Company required to comply with the procedures in Section 64(1):

1. Authorized by A/A

7. Pass an ordinary resolution

2. Make necessary announcement.

3. Make through stock exchange

4. Directors make declaration to the effect.

5. Shares buyback must involve less than 10 percent of total issued and paid up capital.

6. Company is solvent and will not become insolvent.