Plain language law

New Zealand law explained for everyone

Companies Act 1993

Shares and debentures - Company may acquire its own shares

66: Cancellation of shares repurchased

You could also call this:

“What happens to shares when a company buys them back”

When your company buys back its own shares, those shares are usually cancelled right away. This means the company no longer owns them. However, there are some exceptions to this rule, which you can find in other parts of the law.

The shares are considered bought back on the day when the company would normally be able to use the rights that come with owning those shares.

When a share is cancelled:

You lose all the rights and benefits that came with that share. However, your company can still create and sell new shares of the same type in the future if it wants to.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320196.

Topics:
Business > Industry rules
Business > Fair trading
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“Companies can buy shares on the stock exchange without telling shareholders first”

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“When a company can be made to buy back its shares”

Part 6 Shares and debentures
Company may acquire its own shares

66Cancellation of shares repurchased

  1. Subject to sections 67A to 67C, shares that are acquired by a company pursuant to section 59 or sections 112 to 112C are deemed to be cancelled immediately on acquisition.

  2. Shares are acquired for the purposes of subsection (1) on the date on which the company would, apart from this section, become entitled to exercise the rights attached to the shares.

  3. On the cancellation of a share under this section,—

  4. the rights and privileges attached to that share expire; but
    1. the share may be reissued in accordance with this Part.

      Notes
      • Section 66(1): replaced, on , by section 2 of the Companies Act 1993 Amendment Act (No 2) 1994 (1994 No 82).
      • Section 66(1): amended, on , by section 5 of the Companies (Minority Buy-out Rights) Amendment Act 2008 (2008 No 69).