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The Companies Act (71 of 2008) allows a company to buy back its own shares in the open market, provided it can pass a solvency and liquidity test. To do this the company board of directors must be satisfied that the company can meet its expected cash outflows over the next 12 months from its expected incomes over the same period (liquidity) - and its assets must be more than its liabilities (solvency). Shares which are bought back by a company are known as "treasury shares" and are normally destroyed. For this reason, buy backs reduce the number of shares in issue - which means that the value of the remaining shares increase. This is, in effect, a dividend and is treated as such by the Income Tax Act. If a company is buying its own shares back then it must be because it has no better use for the funds in the business. For example, Datatec announced on 15th January 2019 that it had bought back just under 5% of the company's share capital at a cost of approximately R300m. These shares will be destroyed.

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