What does it mean for a company limited by shares to hold shares in the company?

Holding the shares of the company by a joint stock limited company means that the company acquires the shares held by the company for various reasons. According to the relevant laws and regulations, the shares held by the company cannot enjoy the right to share dividends and vote. Companies can only buy back shares under certain circumstances.

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.