Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

creation of new shares

Reply
Not applicable
how much would the creation of 1500 000 000 new shares affect the price?
0 Kudos
8 REPLIES 8
Taurus
Super Contributor
0 Kudos
Not applicable
cause i do not know
0 Kudos
ollieowen
New Contributor
Where did you hear of these new shares that will be issued??
0 Kudos
Preston
Super Contributor
When a company buyback its shares. All shares bought back will affect firstly the share premium account and retained income (B/S Account). These shares will then be recorded as unissued or cancelled in term of the article of association of the company. So technically there is less number of share floating around , based on demand and supply theory a higher price will be taken by the seller if there is less shares in the market. Similarly when a comapny issue more shares, the company retained income will increase, share premium account will increase and because there is so much shares in the market , the price will generally drop cos if one buyer do not want to sell , you can alway buy it from another buyer at a lesser price. Hope this help Preston
0 Kudos
Captain_Kidd
Contributor
Before there is an issueing of more shares, does the company HAVE to do a buy back first, and if so how do they work out what price to pay, will the price be market related.
0 Kudos
Preston
Super Contributor
No , share buyback and new share allocation is totally independent from one another and should not be confused. If the company want to issue more shares, it need to comply with the requirement of the company act and permission must be obtain in term of general and specific resolution ........ Only once it is satisfy can the company place new share onto the market. Share buyback is basically at market price. Normal bid applies
0 Kudos
topgun
Super Contributor
The obvious answer is that they want to fund acquisitions with paper ie. issue additional shares hence the proposed increase in authorised but unissued share capital. They are trading under cautionary at the moment. This is not necessarily negative to existing shareholders but depends on the quality of acquired assets and the value they place on their own shares.
0 Kudos
Not applicable
Thank you top gun. It is just strange that they don't make it so clear in their notice of general meeting
0 Kudos