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Friday, June 24, 2011

Redemption of Shares

Meaning of Redemption of Shares: A company can purchase its own shares in the open market if so authorised in the articles of association. These can be ordinary or preference shares. One of the main reasons for buying back own shares is to buy out a troublesome shareholder.

Shares can be redeemed in the following ways:

(1) Purchase of own shares out of the proceeds of new share issue:


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