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1846: The Race for the Midwest» Forums » Rules

Subject: How does redeeming shares work? rss

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Lewis Goldberg
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GMT edition, rule 6.3 says "A corporation may either issue shares from its treasury or redeem its own shares from the stock market."

Further down in the note under 6.32, it says a corporation is not required to redeem shares if more of them are in the stock market than are held by players.

Does that mean if less shares are in the stock market than are held by players, you ARE required to redeem shares? If so, how many?

I'm confused.
 
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J C Lawrence
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You are confused because you are adding a corollary that isn't present in the rules. The corollary isn't present because it isn't a rule.
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Mike Anastasia
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There is never any requirement to redeem shares. The bit at 6.32 is just there to make it very clear that even though shares cannot be issued in certain circumstances, there is no requirement to take them back when the inverse is true.

"Issuing shares" is selling shares from the treasury into the open market in order to get extra cash in the corporate treasury, from the bank.

"Redeeming shares" is the opposite - paying cash from the corporate treasury to the bank to pull shares from the open market back into the company treasury.
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Tom Lehmann
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lgoldberg wrote:
Does that mean if less shares are in the stock market than are held by players, you ARE required to redeem shares?

No.

There is an limit (see 6.31) on how many shares a corporation can issue: # shares held by players - # shares already in Stock Market.

So, if 3 shares are held by players (say, 2 by the President and 1 by an investor) and 1 share is in the Stock Market, a RR can't issue more than 2 shares.

Suppose the corporation does issue 2 shares. Now, there are 3 shares in the Stock Market.

Now, in the next Stock Round, suppose the investor player sells 1 share and the President doesn't buy any more. The stock round ends with 2 shares held by players and 4 shares in the Stock Market. This is 2 more than the issuance limit above; clearly, the RR can't issue more shares.

But, this situation begs the question (which was asked during playtests), is the RR required to redeem 2 shares? The answer is no. The limit is only on *issuing* shares and is *not* a requirement that the RR must act to maintain a 1:1 or better ratio of shares held by players vs shares in the stock market.

That's all the Note after 6.32 is saying. Nothing more. Don't read more into it than what it says.
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Lewis Goldberg
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Tom Lehmann wrote:
That's all the Note after 6.32 is saying. Nothing more. Don't read more into it than what is it says.


Thanks, Tom (and everyone else). It was extra confusing because it would never have occurred to me that the RR would have to redeem shares in any case, up to the point that I read the note. The clarifying note itself is what cast my doubts
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Dave Berry
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Read it as, "A corporation is not never required to redeem shares, even if more of them are in the stock market than are held by players".
(strikethrough = deleted text; bold = inserted text)
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