SIE: 1.3.1. Treasury Shares

Taken from our SIE Online Guide

1.3.1.  Treasury Shares

Treasury shares, or treasury stock, are shares that have been issued but are not owned by investors; instead, they are owned by the company. Treasury shares may have been issued but never sold to the public. By keeping shares “in the treasury” a company can give itself the option of raising additional money by selling treasury stock in the future. Alternatively, treasury shares are shares that a company may have repurchased from investors and removed from public circulation. Treasury shares are considered to be issued shares; however, they have no voting rights and pay no dividends.

Corporations buy back shares from investors for several reasons. Treasury shares may be used in employee benefit programs, such as stock options or bonuses for executives, or employee stock purchase plans. Treasury shares may be used to acquire the assets of another corporation or to thwart a hostile takeover. Treasury shares may be used to boost the earnings per share of the company: As shares are taken out of circul

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