What does stock repurchase cancellation mean?
The purpose of share repurchase and cancellation of the Company is as follows:
1, the listed company conducts anti-takeover.
Share repurchase will reduce the number of shares issued by the company, thus reducing the number of shares that the purchaser can buy from the market and reducing the risk of being acquired.
2. Improve the efficiency of capital use.
When the company's disposable cash flow is much higher than the cash flow needed by the company to invest in the project, the company can use the remaining cash flow to buy back some shares, thereby increasing the profit per share, improving the return on net assets and reducing the pressure on the company's profit indicators.
3. Stabilize the company's share price and maintain the company's image.
When the listed company's share price is lower than its intrinsic value, the listed company will buy back the shares and cancel them, so as to stabilize the share price, enhance investor confidence and maintain the company's image.
Extended data:
Stock repurchase refers to the behavior of a listed company to buy back a certain number of shares issued by the company from the stock market in cash. After the stock repurchase is completed, the company may cancel the repurchased shares.
However, in most cases, the company reserves the repurchased shares as "treasury shares", which no longer belong to the issued shares and does not participate in the calculation and distribution of earnings per share.
Treasury shares can be used for other purposes in the future, such as issuing convertible bonds and employee welfare plans. Or sell them when you need money.
20 18 1 1.9 Opinions on Supporting Share Repurchase of Listed Companies were jointly issued, and shall come into force as of the date of promulgation. The Opinions broaden the sources of repurchase funds, appropriately simplify the implementation procedures, guide the improvement of governance arrangements, encourage various listed companies to implement equity incentives or employee stock ownership plans, strengthen incentives and constraints, promote the company to consolidate its valuation foundation, enhance its risk management capabilities, and improve the quality of listed companies.
2018165438+1From October 23rd, the Detailed Rules for the Implementation of Share Repurchase of Listed Companies in Shanghai Stock Exchange (Draft for Comment) was publicly solicited for comments.
According to the different places of stock repurchase, it can be divided into two types: on-site public acquisition and off-site agreement acquisition.
On-site public takeover means that a listed company equates itself with any potential investor and entrusts a securities company with a formal trading seat on the stock exchange to buy back shares on its behalf at the current market price.
This method is popular in mature foreign stock markets.
According to incomplete statistics, the total amount of shares repurchased by American companies in this way is about $230 billion, accounting for more than 85% of the total repurchase.
Although this method is highly transparent, it is difficult to prevent price manipulation and insider trading. Therefore, the US Securities and Exchange Commission has strict regulatory rules on the time, price and quantity of on-site repurchase.
Over-the-counter agreement acquisition refers to a way for a stock issuing company to directly meet with certain investors (such as state-owned shares) or certain investors (such as legal person shares and B shares) in the over-the-counter market and buy back shares through negotiation.
The contents of the negotiations include the determination of price and quantity, as well as the implementation time. Obviously, the defect of this method lies in its low transparency, which violates the principle of "three publics" in the stock market.