Can a limited company buy back its own shares?

Limited companies can buy back their own shares, but only under legal circumstances. According to the relevant laws and regulations, if the company has not distributed profits to shareholders for five consecutive years, but the company has made profits for five consecutive years and meets the conditions for distributing profits stipulated in this law, it may buy back its shares.

legal ground

Article 142nd of the Company Law

When a listed company purchases its own shares, it shall fulfill the obligation of information disclosure in accordance with the provisions of the Securities Law of People's Republic of China (PRC).

Article 142

A company may not purchase its own shares. However, except for one of the following circumstances:

(1) Reduce the registered capital of the company.

(2) Merging with other companies holding shares of the Company;

(3) Use the shares for employee stock ownership plan or equity incentive.

When a listed company purchases its own shares, it shall fulfill the obligation of information disclosure in accordance with the provisions of the Securities Law of People's Republic of China (PRC). A listed company shall purchase its shares under the circumstances specified in items (3), (5) and (6) of the first paragraph of this article through public centralized trading.

A company may not accept its own shares as the object of pledge.