Canceled shares are company shares that have been repurchased and permanently removed from circulation. Once shares are canceled, they no longer exist as issued shares and cannot be reissued or traded in the market. This action reduces the total number of outstanding shares and may also reduce the company’s authorized share capital, depending on corporate regulations and board approval.

Companies typically cancel shares after buying them back through a share repurchase program. Instead of holding the repurchased shares as treasury stock for possible future resale, management may decide to cancel them to permanently shrink the equity base. This move can increase earnings per share (EPS) because net income is divided among fewer outstanding shares. As a result, existing shareholders may see an increase in ownership percentage and potentially higher share value.

From an accounting perspective, canceling shares reduces shareholders’ equity by eliminating the repurchased shares from the treasury stock account and adjusting related capital accounts. The exact treatment depends on local accounting standards and whether the shares were recorded using the cost or par value method.

Overall, canceled shares represent a strategic corporate decision aimed at improving financial ratios, strengthening shareholder value, and optimizing capital structure.