As part of my work with Vestd I end up learning about a variety of business topics, a recent one I have had to improve my knowledge of is treasury shares. So below, mainly for my future benefit, is a summary of them.
Put simply treasury shares are a pool of shares already in existence and held by the company that are available to use for a variety of purposes.
Treasury shares used to only be available to listed companies but a recent rule change made them available to all private companies.
Shares already in existence can be bought by the company and held as treasury shares. An SH03 will need to be filed with Companies House to record the buyback. Shares that are bought back can be retained in the original share class, for example Ordinary shares.
Treasury shares have no voting rights, no rights to any dividends or cash distributions, however a company can benefit from the distribution of bonus shares.
Treasury shares can be used for a variety of things, these will be governed by the companies articles or SHA's. For example, treasury shares can be used for employee option schemes or to facilitate new cash investment.
Stamp duty is potentially liable on purchased shares, there are limits which determine if the purchase is exempt from duty.