Stock cancellation refers to the company recycling specific stocks and destroying them. As a result, the number of shares in the company will decrease.
First, the method of stock cancellation:
(1) Forced revocation. Regardless of the wishes of shareholders, shareholders are required to provide shares by lottery, and the company returns its share capital and cancels the recovered shares.
(2) Cancel at will. After consulting with shareholders and obtaining their consent, the company will recover its own shares and cancel them.
(3) paid termination. The cancellation of payment of equivalent funds to shareholders can be divided into two situations: cancellation with company profits and cancellation with company capital.
(4) Free cancellation. The cancellation of non-payment of shareholders' funds leads to a decrease in the number of shares, but the company's capital does not decrease.
2. Conditions for cancellation of shares:
Under normal circumstances, once the shares are issued, the shareholders may not withdraw their shares, and the issuing company may not purchase its own shares, but the cancellation of shares is allowed under the following circumstances:
(1) When the company suffers heavy losses, it can reduce certain capital according to the shares held by shareholders;
(2) When the company is divided into several companies, the original shares may be cancelled and the new shares after the division shall be delivered to the shareholders;
(3) According to the Articles of Association, the shares shall be cancelled with the profits distributed by shareholders. If a mining company is about to be dissolved due to the exhaustion of mineral resources, it shall gradually repurchase shares with profits in advance according to the company's articles of association to simplify the final settlement procedure.
(4) According to the redemption clause in the sales contract signed by the company's shareholders, repay the principal and interest and recover the shares after the specified time. For any of the above cancellation methods, a general meeting of shareholders must be held in advance to make a special resolution on cancellation.
Three. Type of cancelled stock:
Stock cancellation can be divided into compulsory cancellation and arbitrary cancellation. Compulsory cancellation is the legal elimination of shares, which means that a company unilaterally eliminates its issued shares by purchasing, drawing lots or other means, so as to eliminate them. According to the agreement between the company and the shareholders, any cancellation is made in the articles of association, and both parties agree to destroy the shares.