METHODS OF BUY BACK

A

abhishreshthaa

Abhijeet S
HERE ARE SOME METHODS OF BUY BACK OF SHARES


The company can buy back its shares in following ways:-


1. From the existing shareholders on a proportionate basis through the tender offer.



2 From open market through


a)Stock exchange
b) Book building process.


3. From odd-lot holders




BUYBACK OF SHARES THROUGH TENDER OFFER


  • the company fixes and announces a price at which the buyback procedure will be carried out.

  • it is permissible for the promoters to offer their shares for buy-back, provided they make specified disclosures as follows -


  1. The quantum of shares proposed to be tendered, &

  2. The details of their transactions and their holdings for the last six months prior to the passing of the special resolution for buy-back including information of number of shares acquired, the price and the date of acquisition.


  • If the number of shares offered for buy-back by the shareholders at this price exceeds the total number of shares determined by the company to be bought back, then shares shall be bought from each shareholder proportionately.


  • A public announcement has to be done before the buy back is made in at least one English National Daily, one Hindi National Daily and a Regional language daily at the place where the Registered office of the company is situated and shall contain all the material information

  • The public announcement shall specify a date, which shall be the `specified date’ for the purpose of determining the names of the shareholders to whom the letter of offer shall be sent.

  • The specified date shall not be earlier than thirty days and not later than forty-two days from the date of the public announcement.


  • The Company shall within seven working days of the public announcement shall file with the Board a draft-letter of offer containing disclosures through a merchant banker who is not associated with the company.

  • The draft letter shall be accompanied with the fees.

  • The letter of offer shall be dispatched not earlier than twenty-one days from its submission to the Board.


  • The company shall complete the verifications of the offers received within fifteen days of the closure of the offer

  • The deposit in the escrow account shall be made before the opening of the offer
 
DEFINITION OF 'BUYBACK'

The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buy back shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may be looking for a controlling stake.

:SugarwareZ-140:
 
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