| Commentary

209.4 Effect of acquiring own shares

| Commentary

209.4 Effect of acquiring own shares

Where a limited company makes a purchase of its own shares in accordance with the prescribed rules, the shares are treated as cancelled, and the amount of the company’s issued share capital is diminished accordingly by the nominal value of the shares cancelled1.

Where the purchase is made wholly out of the company’s profits, the company must transfer the amount by which the company’s issued share capital is diminished on cancellation of the purchased shares to a reserve, called the ‘capital redemption reserve’2. Where the shares are purchased wholly or partly out

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