ANSWER TO PARLIAMENTARY QUESTION ON: Share Buybacks
For Parliament Sitting on 19 Feb 98
Question To ask the Deputy Prime Minister if he will consider amending the law to allow companies to buy their shares,
Answer: 1. The Finance and Banking Sub-Committee, chaired by Mr Peter Seah, has recommended amending the Companies Act to permit share buy-backs by listed companies. The Government has accepted this recommendation.
2. Share buy-backs will give companies greater flexibility in their capital structures and in managing their finances. However, safeguards will be necessary to prevent abuse.
3. The existing prohibition on share buy-backs in the Companies Act followed UK law. But the UK, and several other Commonwealth countries including Australia, New Zealand and Canada have since changed their laws to permit share buy-backs, with appropriate safeguards. Their experience is relevant to us.
4. The Corporate Finance Committee chaired by Mr Lim Yong Wah will study and propose how to implement a scheme to allow share buy-backs.