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Cancellation of shares
The cancellation of shares is the legal act whereby a company withdraws its own shares from the issued capital, thereby reducing the share capital.
The cancellation of shares is the process by which a private limited company (BV) or public limited company (NV) cancels shares held in its own treasury. This results in a formal reduction of the issued share capital and generally requires a resolution of the general meeting of shareholders.
This measure is relevant because it affects the allocation of voting rights and profit rights among the remaining shareholders and may be used to optimise the company’s capital structure. It must comply with the provisions of Book 2 of the Dutch Civil Code, including any amendment to the articles of association and the protection of creditors.
In practice, cancellation is frequently effected following a repurchase of own shares in connection with corporate restructurings, shareholder exits or the repayment of surplus capital without a dividend distribution.
“The general meeting approved the cancellation of the shares previously repurchased by the company in order to reduce the share capital.”
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