Treasury share are shares held by the company that issued them. A company acquires treasury shares by buying them in the market.
In the UK, Treasury shares can be cancelled, sold, or used in employee share (or share option) schemes. Companies are required to disclose their holding of treasury shares and any sales, cancellations or transfers.
The commonest use of treasury share among UK listed companies seems to be to hold shares for employee share schemes.
Treasury shares are disregarded in calculating undiluted EPS.