76K. Treasury shares: disposal and cancellation

Question 1

76K. Treasury shares: disposal and cancellation

Answer 1

General overview
[76K.01] Section 76K(1) and (1C) provide the ways in which treasury shares are to be disposed of or cancelled in a private and public company respectively. The various methods are stated in paragraphs (a) to (e) of subsections (1) and (1C) respectively.
Act No 36 of 2014 introduced two changes to s 76K: (a) it divides the section into “private” and “public” companies, i.e subsections (1) and (1C) respectively; and (b) it expands the category of persons to whom the treasury shares may be transferred to under a share scheme by including “directors and other persons”. Otherwise, s 76K remains the same.

Question 2

Compulsory purchase under s 215

Answer 2

[76K.02] Subsection (3) provides that if the company receives a notice under s 215 that a person desires to acquire any of the shares stated in the notice (including treasury shares), the company shall be obliged to sell or transfer those shares to that person.

Question 3

No reduction of capital

Answer 3

[76K.03] Subsection (4) provides that when a company cancels its treasury shares, it need not comply with the procedures on capital reduction under ss 78B, 78C and 78I.