What are Treasury Shares? Guide for Singapore Companies

Last updated on July 25, 2022

man thinking of buy or selling shares

Shares hold a vital role in equity ownership and the growth of a company. Amongst the various classes of shares, treasury shares are stocks that have been reacquired by their company and provide several benefits.

If you are a private company owner who wants to know more about treasury shares and how they work, this article is for you.

In this article, we will cover:

What are Treasury Shares?

Typically used as a form of reserved stock to raise funds or pay for future investments, treasury shares are ordinary shares that have been repurchased and repossessed by their company. The shares can be held by a company for an indefinite period of time, sold, transferred or cancelled.

How are treasury shares different from other types of shares?

Unlike more common types of shares like ordinary and preference shares, treasury shares do not provide holders with any voting rights or the ability to receive dividends from the company.

In spite of these limitations to shareholders, treasury shares prove to be a useful tool from a company’s perspective. This will be discussed further below.

What are the Benefits of Treasury Shares? 

Treasury shares act as a safeguard for the ownership of a company. By repossessing shares, a company can defend itself from hostile takeovers. This can happen if, for example, company A threatens to gain control of company B by buying company B’s shares. In such an event, company B can repossess its shares and hold them as treasury shares. This is done to reduce the number of shareholders who are able to sell their shares, which may make the takeover more difficult to accomplish

Additionally, by reducing the number of shares in the company and holding these shares as treasury shares, companies can improve financial ratios like the proportion of earnings per share.

What Can Companies Do With Treasury Shares?

As mentioned, a company may sell, transfer or cancel its treasury shares.

Selling shares

Though they usually hold little value, treasury shares can be listed in the open market and sold to investors for cash consideration.

Your company can use the capital raised to fund investments or buy out competing businesses.

Transferring shares to employees

Another route that your company may take is transferring shares to employees. This may be part of an employee stock option plan, in which employees are given the right to purchase company shares. Doing so increases the ownership an employee has in the company and is a strategy for companies to retain talent. You can find out more about employee stock option plans in Singapore in this article.  

Once treasury shares are transferred, they become ordinary shares and hold the same powers like the right to vote in meetings.

Cancelling shares

When a company cancels its shares, it simply declares those share certificates attached to the shares to be null and void, reducing the overall number of shares accordingly.

Companies that wish to cancel, sell or transfer their treasury shares are required to go to BizFile+ to lodge the “Notice of Cancellation or Disposal of Treasury Shares under S76K” transaction with ACRA. The cancellation, sale or transfer of treasury shares will take effect only once ACRA has updated the electronic register of members of the company.

Is There a Maximum Number of Treasury Shares that a Company May Have?

If your company has only one class of shares, the number of treasury shares it can hold must not exceed 10% of the total number of shares at that specific time.

Even if a company is in possession of shares of different classes, the cap on the number of treasury shares held remains at 10%.

Should your company exceed the 10% limit, the excess shares must be disposed of or cancelled within 6 months. This 6-month period begins on the day on which the limit was exceeded. ACRA may extend the disposal and cancellation period in some cases, but the bottom line is that your company will have to remove any extra treasury shares that exceed the 10% limit.

What Happens After a Company has Reduced the Number of Treasury Shares in Its Possession?

Once treasury shares have been cancelled, they are permanently retired and may not be reissued at a later date. Consequently, the shares are no longer listed in the company’s financial statements.

In contrast, non-retired treasury shares can be redistributed through stock dividends, employee compensation, or capital raising.

How Can People Check the Number of Treasury Shares that the Company Has?

Knowing the number of treasury shares may be of interest to shareholders.

Interested parties can check the number of treasury shares that a company has via the company’s business profile which can be obtained from the BizFile+ website.

Treasury shares can play an integral role in the strategic planning of a company. For example, they can be invested to solidify a company’s position in its industry by acquiring competitors or used as a financial reserve.

Should you need help in deciding what to do with your treasury shares, you may want to engage a corporate services firm to advise you on the best course of action for your company. Their trained professionals will be able to help you with the seamless filing of any relevant transactions on BizFile+, prepare necessary documents for share transfers, as well as settle any other documents that may arise in your transactions.

Appointment and Removal of Company Officers and Other Key Personnel
  1. What is a Nominee Director & How to Appoint One in Singapore (With FAQs)
  2. Independent Directors: Who are They and What is Their Role?
  3. Board of Advisors: Who Are They and What Is Their Role?
  4. Appointing Company Directors in Singapore: Eligibility, Process etc.
  5. Managing Director vs CEO in Singapore: Roles and Obligations
  6. Guide to Directors' Remuneration in Singapore
  7. Directors' Duties in Singapore
  8. Shadow Directors: Who are They and What Duties Do They Owe to the Company?
  9. How to Remove a Director from a Company in Singapore
  10. Removal and Resignation of Company Auditor in Singapore
  11. Appointing a Company Secretary: Roles and Responsibilities
  12. Appointing an Authorised Representative for Foreign Companies in Singapore
  13. Process Agents in Singapore
Holding Meetings
  1. What are Annual General Meetings (AGMs) in Singapore?
  2. How to Hold Extraordinary General Meetings (EGMs) in Singapore
  3. How to Hold a Board Meeting in Singapore
Shareholder Matters
  1. Share Buybacks in Singapore: Procedure, Cost and More
  2. How to Split Shares (or Stocks) in a Singapore Company
  3. 2 Ways to Remove a Singapore Company Shareholder ASAP
  4. What are Treasury Shares? Guide for Singapore Companies
  5. A Guide to Paid-Up Capital in Singapore
  6. Preparing a Register of Shareholders for a Singapore Company
  7. How to Issue Shares in a Singapore Private Company
  8. Guide to Transferring Shares in a Singapore Private Company
  9. Your Guide to Share Certificates in Singapore: Usage and How to Prepare
  10. Shareholder Rights in Singapore Private Companies
  11. Shareholder Roles and Obligations in Singapore Companies
  12. Dividend Payments Guide for Singapore Business Owners
  13. Share Transmission: What Happens If a Shareholder Dies in Singapore?
  14. How to Reduce the Share Capital of Your Singapore Company
  15. Buy-Sell Agreements: How to Write & Fund Them in Singapore
  16. Oppression of Minority Shareholders
  1. Is Your Business Collaboration Competition Law-Compliant?
  2. Explained: Registered Filing Agent for Singapore Businesses
  3. Transfer Pricing Obligations of Singapore Companies
  4. Adhering to Trading Sanctions and Restrictions in Singapore
  5. Cyber Hygiene Compliance Guide for Singapore Companies
  6. Corporate Social Responsibility For Businesses in Singapore
  7. A Guide to Food Standards in Singapore
  8. Essential Regulatory Compliance Guide for Singapore Companies
  9. Dormant Companies and Their Filing Obligations in Singapore
  10. Anti-Money Laundering Regulations and Your Business: What You Need to Know
  11. Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
  12. Can Singapore Businesses Legally Conduct Lucky Draws?
  13. Restaurant Inspection and Food Safety Rules in Singapore
Company Management
  1. Does Your Company Need a Legal Team (In-House Counsel)?
  2. Acqui-Hiring of Singapore Companies: How Does It Work?
  3. Can a Company Director Take Legal Action Against Another Director?
  4. How to Change the Name of Your Singapore Company
  5. Can Directors be Liable for Company Debts in Singapore?
  6. Company Loans to Directors/Shareholders in Singapore
  7. 3 Types of Insurance Every Singapore Business Needs
  8. Creating and Registering Charges in Singapore: Guide for Companies
  9. Guide to Effective Business Continuity Planning in Singapore
  10. Business Asset Sale & Disposal in Singapore: How Do They Work?
  11. 5 Ways To Resolve Business Partnership Disputes in Singapore
  12. How to Commence a Derivative Action on Behalf of a Company in Singapore
  13. Business Will: How to Pass on Your Business to Your Successors in Singapore
Company Documents
  1. Record-Keeping Requirements for Singapore Companies
  2. Company Constitutions in Singapore and How to Draft One
  3. Company Memorandum and Articles of Association
  4. Company Resolutions: What are They?
  5. Board Resolutions in Singapore
  6. Minutes of Company Meeting in Singapore: How to Record
  7. How to Set Up a Register of Controllers
  8. How to Set Up a Register of Nominee Directors
  9. Guide to Filing Financial Statements for Singapore Business Owners
  10. Filing Annual Returns For Your Business
Tax, Accounting and Audit Matters
  1. Carbon Tax in Singapore: What is the Rate and Who Must Pay?
  2. Laws and Penalties for GST Evasion in Singapore
  3. 6 Common Taxes in Singapore For Individuals & Businesses
  4. Singapore Corporate Tax: How to Pay, Tax Rate, Exemptions
  5. Start-Up Tax Exemption Guide for New Singapore Companies
  6. GST Registration: Requirements and Procedure in Singapore
  7. What is Withholding Tax and When to Pay It in Singapore
  8. Singapore Influencers: Here's How to Calculate Your Income Tax
  9. Investigating Tax-Evading Business Owners in Singapore
  10. Small Business Accounting Services in Singapore
  11. Company Audits in Singapore: Requirements and Exemptions
Data Protection
  1. Suspect a PDPA Data Breach? Here's What to Do Next
  2. Must You Notify PDPC About a Data Breach in Your Business?
  3. Data Room: Should Your Singapore Company Set Up One?
  4. Victim of a Data Breach? Here’s What You Can Do
  5. Summary: Your Organisation's 10 Main PDPA Obligations
  6. Essential PDPA Compliance Guide for Singapore Businesses
  7. PDPA Consent Requirements: How Can Your Business Comply?
  8. Is It Legal for Businesses to Ask for Your NRIC in Singapore?
  9. How To Prevent Unauthorised Disclosure When Processing and Sending Personal Data
  10. Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
  11. Drafting a Comprehensive Privacy Policy For Your Singapore Website
  12. GDPR Compliance in Singapore: Is it Required and How to Comply
  13. Appointing a Data Protection Officer For Your Business: All You Need to Know
  14. How Can Companies Dispose of Documents Containing Personal Data?
  15. Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
  16. How to Legally Install CCTVs for Home/Business Use in Singapore
  17. Is Web Scraping or Crawling Legal in Singapore?
  18. Legal Options If Employees Breach Confidentiality in Singapore
  1. Social Media Marketing: Legal Guide for Singapore Businesses
  2. Your Guide to E-commerce Website Terms of Service in Singapore
  3. Dealing with Defamation of Your Business: Can You Sue?
  4. Sending Email Newsletters That Comply With Singapore Law
  5. A legal guide to drafting a social media policy for your company
  6. Your Guide to a Media Release Form in Singapore
  7. Your Guide to an Influencer Marketing Agreement in Singapore
  8. Outdoor Advertising: How to Legally Display Public Ads in Singapore
Fintech and Payment Services Advisory
  1. A Guide to Digital Bank Regulation in Singapore
  2. Applying for a Major Payment Institution Licence in Singapore
  3. Applying to the MAS FinTech Regulatory Sandbox
  4. Payment Services Act Licensing Guide for Fintech Businesses
  5. How to Get a Payment Service Provider Licence in Singapore
  6. Financial Adviser's Licence Guide for Singapore Businesses
  7. Capital Markets (CMS) Licence Requirements in Singapore
  8. How to Offer E-Wallet Services in Singapore: Licensing Guide
  9. Digital Payment Token Services Licence Guide in Singapore
  10. How to Legally Offer Crypto Services in Singapore
  1. Starting a Franchise in Singapore: What Franchisors Should Look Out For
  2. Running a Franchise in Singapore: What To Look Out for as a Franchisee
Debt Restructuring
  1. What is Judicial Management and How It Works in Singapore
  2. Schemes of Arrangement: How They Work and How to Apply
  3. Informal Debt Restructuring and Workout in Singapore
Ending a Business
  1. How to Restore a Struck-Off Company in Singapore
  2. Claw-Back of Assets From Unfair Preference and Undervalued Transactions
  3. Should You Save or Close Your Zombie Company in Singapore?
  4. Voluntary Suspension of Business in Singapore: How to Handle
  5. Winding Up a Singapore Company: Grounds and Procedure
  6. Closing Your Singapore Business: What You Need to Settle
  7. Striking Off a Company
  8. Restoring a Company That was Struck Off Without You Knowing
  9. Dissolution of partnerships in Singapore
  10. What Should a Creditor Do When a Company Becomes Insolvent?
  11. How to File a Proof of Debt Against a Company in Liquidation
  12. Validation of Payments Made by Companies Being Wound Up