Specific issues of balance sheet treatment, acquisition and reporting of share repurchases transaction in the Republic of Srpska

Abstract

Despite the global growing importance of repurchases of own shares, these transactions have a small scale of volume in the Republic of Srpska. There are few reasons why companies in the Republic of Srpska are not using this legal institute and one of the most prominent reason is inadequate legislation. As a consequence do to the fact that the Company Law of the Republic of Srpska defines pro-rata method as the obligatory one, companies are practically enabled to acquire their own shares in order to prevent significant damage to the company. Globally, in recent years this was the most frequent reason for acquiring own shares as the consequence of the crisis. The analysis of the legal provisions governing the matter of acquiring, selling/canceling and reporting on own shares, show that it is necessary to make certain changes in order for companies to be able to efficiently use this legal institute, as well as to reduce the possibility of misuse of this institute. The paper also points out that companies in the Republic of Srpska do not report share repurchase transactions in accordance with the IAS 32, although they have legal obligation to directly apply to IFRS/IAS regulations.

Keywords

• share repurchases
• financial reporting
• management reporting
• Corporate Law
• The Republic Srpska