Redemption of shares

Redemption (repurchase) of shares in a joint-stock company is often linked to a reduction of its share capital. Share redemption may result from circumstances specified in the company’s articles of association or from generally applicable provisions of law. Described below are the situations in which redemption of shares may occur. We explain the share redemption procedure and clarify whether it always leads to a share capital reduction.

Redemption of shares – types

Redemption of shares may be voluntary (against remuneration or without remuneration), forced, or contractual (automatic). Forced redemption (leading to a repurchase of the shares by the company), automatic redemption and voluntary redemption of shares must all be provided for in the joint-stock company’s articles of association. A resolution on the redemption of shares must be published in Monitor Sądowy i Gospodarczy (Court and Business Gazette).

Voluntary redemption of shares 

Voluntary redemption of shares by way of their acquisition by the company may either be carried out against remuneration or without remuneration. Redemption of shares against remuneration requires a resolution of the general shareholders’ meeting specifying the amount of the remuneration, the legal grounds for the redemption of shares, and the method of reducing the share capital. In the case of redemption without remuneration, the resolution must specify the reasons for the lack of remuneration. Voluntary redemption may only be carried out once in a financial year.

Forced redemption of shares

The characteristic feature of forced redemption of shares is the fact that the consent of the shareholder whose shares are to be redeemed is not required. Forced share redemption is always carried out against remuneration. As stipulated in the applicable legal provisions, the remuneration may not be lower than the net asset value per share as for the previous financial year, reduced by the amount to be divided among the shareholders. Forced share repurchase resulting from an amendment to the company’s articles of association may not concern shares subscribed for prior to the registration of such amendment in the National Court Register. Similarly to the voluntary redemption of shares, forced share redemption also requires adoption and publication of a resolution of the general shareholders’ meeting. However, such a resolution should also state the reasons for the redemption.

Automatic redemption of shares

Automatic redemption of shares may only be carried out if an event the occurrence of which allows for such a possibility is provided for in the articles of association. Similarily to forced redemption, contractual redemption is also carried out against remuneration, which may not be lower than the net asset value per share as for the previous financial year, reduced by the sum to be divided among the shareholders. Under this share redemption mode, unlike under the two other modes described above, no resolution of the shareholders’ general meeting is required. Instead, it is the management board that passes a resolution on the reduction of the company’s share capital.

Purchase of the company’s own shares for the purpose of their redemption

As a rule, a company may not purchase its own shares. However, there are certain exceptions to this rule which include a situation in which the company’s own shares are acquired exclusively for the purpose of their redemption.

Utility certificates

It is a frequent practice that articles of association of joint-stock companies provide for utility certificates to be issued to shareholders in exchange for the redeemed shares. Utility certificates may be registered certificates or bearer certificates. However, they do not have a specified nominal value. In principle, utility certificates entitle their holders to participate in the dividends and in the balance of the assets of the company over and above the nominal value of the shares. However, utility certificate holders are not liable for any obligations attached to the redeemed shares, nor do they enjoy any such rights, except for those named above.

Should creditors be summoned to file claims?

Generally, redemption of shares is linked to a reduction of a joint-stock company’s share capital. As a rule, a share capital reduction results in the company’s obligation to summon its creditors to file claims against the company (the so-called ‘convocation procedure’). However, an exemption from this obligation applies with regard to fully paid-up shares in the following situations:

  1. the shares to be redeemed are the company’s own shares which had been acquired gratuitously for the purpose of their redemption;
  2. the remuneration of the shareholders of the redeemed shares is to be paid out of the company’s profit allocated for distribution among the shareholders;
  3. the redemption is carried out without any consideration payable to the shareholders (except for any utility certificates to be granted).


Redemption of shares is often linked to a reduction of a joint-stock company’s share capital. Redemption of shares should be provided for in the company’s articles of association. It may be carried out both with and without the consent of the shareholder concerned. Moreover, the shareholder will not always be entitled to remuneration in consideration for the redeemed shares. However, the shareholder may expect to receive a utility certificate in return, often making them eligible for a dividend from the profit obtained by the company in a given financial year. Radkiewicz Lawyers Poland has the knowledge and the experience in providing ongoing support to capital companies. We will gladly offer you our assistance in carrying out a share redemption and a share capital reduction process concerning a joint-stock company.

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