TNAG-1645-FCO40-2292-Company-law-reform-in-Hong-Kong-Companies-(Amendment)-(No.-2-1987 — Page 65

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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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