Treasury stock

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A treasury stock or reacquired stock is stock which is bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings).

Stock repurchases are used as a tax efficient method to put cash into shareholders' hands, rather than paying dividends, in jurisdictions that treat capital gains more favorably. Sometimes, companies repurchase their stock when they feel that it is undervalued on the open market. Other times, companies repurchase their stock to reduce dilution from incentive compensation plans for employees. Another reason for stock repurchase is to protect the company against a takeover threat.^[1]

The United Kingdom equivalent of treasury stock as used in the United States is treasury share. Treasury stocks in the UK refers to government bonds or gilts.