Share Repurchase Agreement

Share Repurchase Agreements are used to buy back a corporation’s common shares. As compared to common shares, preferred shares have no voting rights, though owners of preferred shares do have priority to the corporation’s income and therefore they have first dip on the dividends (over owners of common shares).

Company share buybacks are generally more beneficial to the corporations than the seller. While this is not always the case, it may not be in a shareholder’s best interest to sell his or her shares. However, it is another story if the seller will not be able to get rid of the shares so easily otherwise, or if he or she is to get more selling the shares back.

Nowadays, many American corporations buy back their shares, usually those that sit on a lot of cash, but not necessarily. A corporation may have to borrow money to buy back its shares, and that move can hurt the company's credit rating. Also, share buybacks have picked up a bad reputation in recent years because they do not do anything for the overall economy and often only serve the corporate executives, especially when their stock options become due.

A share purchase agreement is used to initiate a transfer of shares between two parties. It is designed to protect the interest of both buyer and seller. It is necessary to use this document for the transaction to be legally enforceable.

It is an official accounting ledger that a company uses to record all transactions of its shares. Needless to say, a corporation must keep track of all its float of shares.