The fact that companies are legally able to purchase some of their own shares1 and can, in certain circumstances, do so on advantageous tax terms2 (see D6.605 onwards), raises two separate valuation issues:
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(a)ÌýÌýÌýÌý the effect this will have upon valuations of shares in unquoted companies in general, and
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(b)ÌýÌýÌýÌý what price a company should pay for its shares.
Effect on valuations in general
In any particular valuation, the company must be considered as among the possible purchasers in the open market. The effect, if any, that this will have depends upon:
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(i)ÌýÌýÌýÌý the likelihood of the company's buying:
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(1)ÌýÌýÌýÌý the holding being valued, or
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(2)ÌýÌýÌýÌý other shares in the company, and
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(ii)ÌýÌýÌýÌý the price the company might pay if it did.
If a company changes its Articles of Association to allow a buy-in of its own shares, this has not in the past changed HMRC Shares and Assets Valuation's fundamental approach regarding the discount for the lack
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Web page updated on 17 Mar 2025 17:03