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Comment by mrfusion | Hacker News Reader

Guys what happens if a company buys back all its shares? I've always wondered that.

The last outstanding share of a company is worth the value of the entire company. Selling the last share is typically a liquidation event where all assets are sold to a third party and the cash is distributed to the remaining shareholder. At that point the comany has no value (all its assets having been liquidated) and is shut down.

Lets assume that the last remaining shareholder of Apple made the choice to sell his share to the company for $1 (not a very logical choice). The company still needs shareholders to operate and so the board would need to issue new shares. At that point the could simply grant them to themselves and take control of the company.

Why does the company need shareholders to operate? Does our legal framework prevent a corporation from owning itself and appointing its own board and so forth?

Laws vary based on where you incorporate but for the corporation to stay in good standing requires regular shareholder meetings.

There are other corporate structures that don't require shareholders for things like trusts, non-profits, member controlled companies and cooperatives.

The short answer is, it becomes a private company, no longer traded on the stock exchanges.

But who would own it? There wouldn't be any shareholders left.

There wouldn't be any public shareholders left, and the shares would no longer be traded on the public markets.

But it's still possible to own, sell, or give away the shares privately.

It just means any dealings are by private agreement, and not open to public trade or analyst scrutiny.

This also means the value is more likely to be estimated by relying on business fundamentals and perhaps some aggressive haggling, and not on public market sentiment.

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