Plain language law

New Zealand law explained for everyone

Companies Act 1993

Shares and debentures - Redemption of shares

73: Cancellation of shares redeemed

You could also call this:

“What happens when a company buys back its own shares”

When a company redeems shares as per section 69, those shares are considered cancelled right away. This means they no longer exist as part of the company’s shares.

When a share is cancelled in this way, you need to know two important things. First, all the rights and special privileges that came with that share are gone. Second, even though the share is cancelled, the company can still create and give out a new share in its place, as long as they follow the rules in this part of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM320415.

Topics:
Business > Industry rules
Business > Fair trading
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72: Disclosure document, or

“Document explaining share redemption process and rules”

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74: Redemption at option of shareholder, or

“How shareholders can ask the company to buy back their redeemable shares”

Part 6 Shares and debentures
Redemption of shares

73Cancellation of shares redeemed

  1. Shares that are redeemed by a company pursuant to section 69 are deemed to be cancelled immediately on redemption.

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

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