Can a company repurchase all of its outstanding common stock?

Question

I know this question sounds strange, but could a company theoretically repurchase all of its common stock? If so, would the company own itself? What would be the implications of this? I'm thinking that this would never be possible because 1.) the shareholders would probably never allow it and 2.) as the company repurchased more shares, the share price would increase making it more difficult for the company to repurchase the shares

I know that companies buy back their stock all the time. However, my question is whether or not a company could buy back ALL of its outstanding shares.

Answer 1

Companies do buy back ALL of their outstanding common stock occasionally. It's called "going private," (as opposed to going public.)

Reasons are that the newly privatized company does not have nearly as much reporting do to for the SEC, and the pressure from stockholders to constantly increase net income every quarter is removed.

Technically, there are still shareholders (think about - the company can't really "own itself." But the shareholders are a much more concentrated group, typically insiders, and they are convinced that their long-term financial interests are better if they don't have a "listed" company on a major exchange.

Answer 2

Companies can and do do this all the time. It's called a stock buyback and they do it for percisely the reason you stated - to own themselves. They may do it so they can reduce dividend payouts.
They may also do it if they feel the stock is trading low and they want to get it out of the market perception. Then when the stock goes up, they can resell it if they choose at a profit.
Stockholders allow it for a variety of reasons. First, a lot of times they don't know that the company is the one buying back their stock. Those who won't sell, the company will offer good buyout packages (if the stock value is $10 and the company offers them $15, they may take it).

Companies report these stock buybacks on their balance sheets.

Answer 3

There must be at least one share of stock outstanding, since the corporation must be owned by someone (or something). So, no. However, if the corporation were to be bought out and go private, all of the common stock could be bought up, as the company would then be owned by the buyer.