What happens if a company buys back all shares ?

I don't think it's ever been done.

I can't quote chapter and verse on this, but I believe that there must be a certain minimum number of shareholders for a company to remain a plc. 50 seems to ring a bell.

If a limited company (cf a *public* limited company) were to ever to reduce itself to one shareholder, then that shareholder would be liable for the debts of the company. That's why, when setting up a company, it is usual for one share is given to the wife.

Maybe it would just disappear in a cloud of smoke.

As an interesting aside - when Mrs Thatch was running the country in the

80's, the government looked into the ownership of the bank TSB. Apparently, some lawyers came to the conclusion that no-one owned it. So the Tories flogged it off to the electorate.

And what you may not know: a companies do not necessarily have to have shares. They could be a company limited by guarantee - such as British Mensa. And not all companies that have shares are limited companies. The clothes shop C&A's (remember them) was a company that had shareholders - but it was not a limited company.

that would only happen in a takeover eg a management buy out.

It would be pointless buying 'too' many of their own shares as that would make the shares very illiquid (very few shares in circulation to be traded) and hence unmarketable.

Surely not... I think that two share holders is the minimum for a plc (I know of a plc with 2 share holders).

The share capital of a trading PLC must be at least 50K though.

I thought a company was a seperate legal entity - hence when a company becomes insolvent, it gets wound up. i.e. it is responsible for its own debts.

peter

Usually companies trade at a price above their asset value, i.e. even if the company liqidated all its assets and used the cash to buy back shares it wouldn't have enough to buy all of them (except of course that if a company destroyed itself in that way the price would fall). Even if shares trade below the asset value, which can happen, as it bought shares the remaining assets would be shared between fewer and fewer shares and the price would rise. Either way you would end up with the last shareholders getting all the remaining assets. However, as a general principle it isn't impossible for corporate bodies to be owned by no-one, e.g. charities and trusts, and when TSB was privatised many years ago it was deemed to be effectively owned by no-one.

According to

Under section 24 of The Companies Act 1985, if a company carried on business without having at least two members, for more than six months, the company effectively lost its limited liability status (subject to certain conditions). However, "The Companies (Single Member Private Limited Companies) Regulations 1992", amended this section by not applying s.24 to "a private company limited by shares or by guarantee".

So, you are dead right! I wasn't aware of the 1992 regulations, as I haven't actually practised accountancy for many many years.

My apologies. I appear to have been wrong yet again.