Lex Rex Ph

Treasury Shares

Treasury shares are those previously issued by the company and fully paid by subscribers but are subsequently reacquired by the issuing corporation through PDFRL (purchase, donation, forfeiture, redemption, or lawful means)

Nature of treasury shares

  • they are not original shares or subscription shares
  • not an asset because a corporation may not be counted as a shareholder of its own shares
  • It’s a deduction from the total shareholders’ equity (it’s a shared stock but no longer in the hands of the shareholder)

Resale of treasury shares only allowed if:

  1. at reasonable price
  2. price is fixed by the BoD

Treasury shares not be entitled to:

  1. Dividends
  2. Voting rights

Treasury shares shall not be distributable as:

  1. Cash or
  2. Stock dividend

Status of treasury shares

Q: Is there a watering of stock if treasury shares are sold below par value? 

No, because watering of stock only contemplates the original issuance of shares.

Other Content You May Be Interested In:

Redhibitory Defect

Are those defects in the article sold which the seller is bound to warrant. Such defects render the thing sold as (1) unfit for the

Read More »

Stocks vs. Bonds

Stocks Bonds Nature A unit of ownership of the company A loan to the company Profits over time Intended to appreciate in value through time

Read More »

Gross Negligence

From the Court’s standpoint, the defendant’s casual manner, insouciance and nonchalance, nay, indifference, to the predicament of the distressed corporation glaringly exhibited a lackadaisical attitude

Read More »
en_USEnglish