Why have Treasury Shares?
• Flexibility – Companies can now more effectively manage their capital structures, which may in turn lead to a reduction in cost of capital. • Financial savings – At present, shares bought back must be cancelled, which can be expensive if the shares need to be re-issued at a later date. Treasury Shares remove this requirement. • An alternative to a discounted Rights Issue -Treasury Shares can be resold in small lots through the market at full price. • Investment choices – If companies consider that the return would be higher they can invest in their own shares, rather than in other business projects. • Avoids new allotments – Treasury Shares can be used to satisfy the exercise of Employee Share Options and Employee Share Schemes. They can also be used to fulfil Monthly Purchase Plan and DRIP share requirements. This reduces the requirement to issue and allot new shares, which can be time-consuming and expensive. How will Treasury Share Accounts work? • Treasury Shares can be certifica
