The debate as to be desirability of allowing companies to purchase their own shares has raged intermittently for decades and has been the subject of many inquiries, reports and commissions - both here and overseas. The debate appeared to be concluded in 1989 when amendments to the Companies Act (Cth) 1981 made provision for a repurchase (or ’buy-back’) power. The 1989 amendments incorporated a number of restrictions which were designed to guard against misuse of the power, while affording adequate protection to creditors. These amendments have subsequently been included in the new Corporations Law.

The prospect of substantial ongoing reform to the Corporations Law has reopened the debate. It is the object of this paper to contribute to that debate by arguing against a retention of a repurchase power in the new legislation.