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(1) No company limited by shares or by guarantee and having a share capital shall have power to buy its own shares unless the consequent reduction of share capital is effected under the provisions of this Act.
While it may sound unusual, a company can own shares in itself. Of the two main methods of doing so, the most common is when the company holds treasury shares.
4 By the great weight of authority, a corporation has the right to buy its own stock. 6 Fletcher, Cyclopedia Corporations, perm. ed., Sec. 2848 (1931).
Key Takeaways. A shareholders' agreement is an arrangement among a company's shareholders that describes how the company should be operated and outlines shareholders' rights and obligations. The shareholders' agreement is intended to make sure that shareholders are treated fairly and that their rights are protected.
?Why do corporations sell stock?? is a common question from novice investors and entrepreneurs. Reasons why corporations sell stock include raising capital, developing a new product, growing a business, and paying off debt.
The target company's stock price usually rises due to the deal; an acquiring company pays a premium on the target shares to win the appreciation of the target company's shareholders. Thus, with the premium paid, the selling company stocks get higher and can attract more potential investors.
A company buyback of shares is a popular route for shareholder exits. In many cases the payment on the buy back will qualify for capital treatment and taxed at lower rates of tax than dividends. Company share buybacks are also commonly known as a company purchase of own shares.
§ 55-11-01. Merger. (a) One or more corporations may merge into another corporation if the board of directors of each corporation adopts and its shareholders (if required by G.S. 55-11-03) approve a plan of merger.