12.8
M Bhd, a listed corporation purchases 10,000 of its own shares in January 2010 and keeps them as treasury shares. Subsequently, M Bhd wishes to sell the treasury shares on 12 March 2010 (i.e. more than 30 days from the date of purchase, in accordance with paragraph 12.18 of the Main LR). The weighted average market price of M Bhd's shares for the 5 market days preceding the resale on 12 March 2010 ("5 days weighted average market price") is RM2.00. Can M Bhd sell its treasury shares at RM1.60 on 12 March 2010?
No, M Bhd is not permitted to sell its treasury shares at RM1.60 on 12 March 2010. The price of RM1.60 represents a discount of 20% from the 5 days weighted average market price of RM2.00, which exceeds the 5% discount on the 5 days weighted average market price immediately before 12 March 2010. According to paragraph 12.18 of the Main LR, a listed corporation may only sell its treasury shares at a discount if the discount is not more than 5% of the 5 days weighted average market price.