14A:7-18. Cancellation of reacquired shares

14A:7-18. Cancellation of reacquired shares.

(1) When shares of a corporation are reacquired by purchase, by redemption or by their conversion into other shares of the corporation, the reacquisition shall effect their cancellation, unless the board determines that the shares shall be treasury shares or the bylaws so provide. In addition, any shares which were treasury shares on or before December 1, 1988, shall continue to be treasury shares unless cancelled by the board. The board may cancel treasury shares at any time. Upon their cancellation, shares shall be restored to the status of authorized but unissued shares, unless the certificate of incorporation, or the plan of merger or consolidation in the case of shares acquired by the corporation pursuant to Chapter 11 of this act, provides that such shares shall not be reissued, in which case a certificate of amendment to the certificate of incorporation shall be filed, pursuant to a resolution of the board, reducing the authorized number of shares by the number of shares so cancelled.

(2) The certificate of amendment reducing the authorized shares shall be executed on behalf of the corporation and filed in the office of the Secretary of State not later than 30 days after the cancellation of the reacquired shares not to be reissued. The statement shall set forth:

(a) The name of the corporation;

(b) The number of shares cancelled, itemized by classes and series, and the date of adoption of the resolution of the board cancelling such shares;

(c) The aggregate number of authorized shares, itemized by classes and series, after giving effect to such cancellation;

(d) A statement that the certificate of incorporation or plan of merger provides that the shares cancelled shall not be reissued; and

(e) That the certificate of incorporation is amended by decreasing the aggregate number of shares which the corporation is authorized to issue by the number of shares cancelled.

(f) (Deleted by amendment, P.L.1988, c.94.)

(3) (Deleted by amendment, P.L.1988, c.94.)

(4) A certificate of amendment reducing the authorized shares because of the conversion of convertible shares shall be filed only if the certificate of incorporation provides that such shares shall not be reissued. The certificate of amendment shall set forth the information required by subsection 14A:7-18(2) and in the case of cancellation of converted shares, the certificate of amendment shall be filed not later than 90 days after the close of the fiscal year in which the shares were reacquired.

(5) Nothing contained in this section shall be construed to forbid a cancellation of shares or a reduction of authorized shares in any other manner permitted by this act.

L.1968, c.350; amended 1973,c.366,s.40; 1988,c.94,s.48; 1995,c.279,s.10.