Background
Treasury shares were introduced on 30 Jan 2006. Shares that have been bought back by the company need no longer be cancelled immediately. Instead, the law now allows the company to hold these shares in treasury.
"Treasury shares are useful and cost effective, and would provide companies with greater flexibility to use share buy-backs as a form of capital restructuring." (see page 69, para 3.5.6 of the Company Legislation and Regulatory Framework Committee Report, Oct 2002)
Treasury shares are ordinary shares or stocks purchased or otherwise acquired by a company in accordance with sections 76B to 76G of the Companies Act, Cap 50. These shares can be held by the company or may be sold, transferred or cancelled in accordance with section 76K of the Act.
The company is registered as a member in respect of the treasury shares (see section 76H of the Companies Act), but shares held in treasury will have their voting and rights to dividends suspended as provided for under section 76J of the Companies Act.
The provisions of the Companies Act can be viewed at http://www.acra.gov.sg/Legislation.
Limitation to the amount of treasury shares that a company may own
Section 76I of the Companies Act provides for certain limitations on the number of treasury shares a company may own. Where a company has shares of only one class, the aggregate number of shares held as treasury shares shall not at any time exceed 10% of the total number of shares of the company at that time. Where the share capital of a company is divided into shares of different classes, the aggregate number of the shares of any class held as treasury shares shall not at any time exceed 10% of the total number of the shares in that class at that time.
Share certificates for treasury shares
There is no requirement under the Companies Act for a company to issue share certificates for treasury shares.
Filing of Notice of Purchase or Acquisition of Ordinary Shares/Stocks (Treasury Shares)
The directors of the company shall lodge with the Registrar a copy of the resolution (referred to in sections 76C, 76D, 76DA or 76E of the Companies Act) within 30 days of the resolution passed.
A company has to file the notice of purchase or acquisition of ordinary shares/stocks by submitting an online transaction via BizFile. The filing fee payable is $10.
Filing of Notice of Cancellation or Disposal of Treasury Shares under section 76K
The directors of the company shall lodge with the Registrar the notice of cancellation or disposal of treasury shares in accordance with section 76K within 30 days of the cancellation or disposal of treasury shares.
A company has to file the notice of the cancellation or disposal of treasury shares by submitting an online transaction via BizFile. The filing fee payable is $10.