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1.9
(1)
For private companies, the change would make
investment and participation in such companies more
attractive, by providing shareholders with a further
means of disposing of their shares and by permitting
the remaining members to maintain control and
ownership of the business; and
(2) Public companies with surplus cash resources could find
it useful to be able to buy their own shares and thus
return surplus resources to shareholders, thereby
removing the pressure on the companies to employ
the surplus resources in uneconomic ways, and enabling
shareholders to deploy the resources to better effect.
Part of the British Government's consultative document consisted
of a paper by Professor L.C.B. Gower, author of "Principles of Modern
Company Law" and Research Adviser on Company Law to the Department of
Trade, which included the following elaboration of the claimed advantages
of a company being able to purchase its own shares:
"11.
The main advantages which have been claimed for allowing
companies to buy their own shares are the following:
(a) It may enable the company to buy out a dissident
shareholder.
(b) It facilitates the retention of family control. (c) It provides a means whereby a shareholder, or
the estate of a deceased shareholder, in a
company whose shares are not listed can find a
buyer.
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