A listed company is considering either a one-off special divided or a share repurchase scheme...

CIMA F3 Question Answer

A listed company is considering either a one-off special divided or a share repurchase scheme to reduce its surplus cash level.

Identify TWO advantages that a one-off special payment has over a share repurchase scheme.

It will change balance of share owners.

It will reduce the possibility of a hostile takeholder

It allows shareholder a choice of option in or out of the payment.

It is easier to arrange than a share repurchase

It would result in a transfer of wealth back to the shareholder

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