ExpertEasy1 markMultiple Choice
ACCA · Question 36 · Corporate and Business Law
What is the legal term for shares that a company has bought back from its shareholders and holds in its own name, rather than cancelling them?
What is the legal term for shares that a company has bought back from its shareholders and holds in its own name, rather than cancelling them?
Answer options:
A.
Preference shares
B.
Deferred shares
C.
Treasury shares
D.
Bonus shares
How to approach this question
Identify the terminology for repurchased shares.
Full Answer
C.Treasury shares✓ Correct
When a company purchases its own shares out of distributable profits, it can choose to hold them 'in treasury' rather than cancelling them. These are called treasury shares. They do not carry voting rights or dividend rights while held by the company.
Common mistakes
Confusing treasury shares with unissued authorized share capital.
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