About repurchasing company's share -- who own those shares then?

Question

Let's say previously company MMM was owned by 6 shareholders. They hold 50%, 10%, 10%, 10%, 10%, 10% of company's share respectively. Now since this company made lots of money and the biggest share holder is going to leave, the company repurchased back those 50% share with its retained earning. We have only 5 shareholders now. Then, can we say virtually those 5 shareholders hold 20% share each ?

And, if retained earning is not enough to repurchase those 50% shares, can the biggest share holder let the company borrow money to complete the purchase?

Answer 1

Shares repurchased by the co. itself are called treasury shares and usually there are rules setting a cap to the percentage of treasury shares allowed. It's usually quite a small percentage, like 10%. It's very unlikely you can have 50% in treasury shares. If he really wants to sell out, he can sell to the remaining shareholders or to outsiders at a negotiated price. He should check the Companies Act or Companies Ordinance regarding the cap on treasury shares.

Answer 2

The co.did an IPO and printed 1000 shares of stock.(the owners own the stock)500 to joe, 100 to the other 5 people. The co. is treated like another person. The co. can sell or hold the stock. The co. has a ceo--cfo and other workers.

Answer 3

whilst a business enterprise repurchases this is very own shares potential 2 issues. One is the time is physically powerful for it or enhance time is around the place their overall performance is going to be stable and that they does not innovations taking danger by potential of including greater debt as a replace of shares. 2nd component is they anticipate the returns to be lesser and that they like to maintain the comparable value they supply the inventory holders by potential of having much less shares to divide up lesser income determine predicted.