In the realm of commercial practice, it's common for companies to sell their shares to third parties, but cases where companies buy their own shares are rare. The subscription and purchase of own shares are governed by Articles 296 and following of Law No. 479-08 on Commercial Companies and Individual Limited Liability Enterprises and its amendments. The first part of Article 297 states that:
""Art.297.- The company may authorize the purchase of its own shares by a decision of the ordinary general meeting, only with funds from profits or reserves other than the legal. These shares must be held in treasury in nominative form.""
The II paragraph of the mentioned article states:
""Párrafo II. The company may not own shares representing more than one-tenth (1/10) of the total of its subscribed and paid-up capital, nor more than one-tenth (1/10) of a specific category of shares.""
Thus, the law imposes requirements for the purchase of own shares:
- Approval by the Ordinary General Meeting.
- Funds solely from profits or reserves.
- A limit of one-tenth of the subscribed and paid-up capital.
This limitation poses challenges, but companies can address it by multiple transactions, ensuring compliance with the one-tenth limit. It's advisable for companies to regulate the acquisition of own shares through their bylaws to facilitate operations and overcome legal limitations. Finally, it's useful for the purchase operation to have a favorable report from the Comptroller and the approval of the Board of Directors and the Ordinary General Meeting.