Introduction To The Indian Capital Market
Competitive forces with the unleashing of the liberalization policieshave made corporate restructuring a sine quo non for survival andgrowth. Operational, financial and managerial strategies are employedto maintain competitive edge and turnaround a sickened performance.Financial restructuring involves either internal or external restructuring(i.e. Mergers and Acquisitions). In the internal restructuring an existingfirm undergoes through a series of changes in terms of composition of assets and liabilities.Section 100-105 of The Company's Act 1956 governs the internalrestructuring of a corporate entity in the form of capital reduction.Section 77A, 77B and 77AA now allow companies to buy back theirshares following the recommendations of committee on corporaterestructuring, which was set up by the government to propose variousstrategies to strengthen the competitiveness of the banking andfinance sector, companies are now allowed to repurchase their ownshares. This will enable the companies to catch up with other developedmarkets as part of the government's moves to liberalize the localmarket and hence emerged the concept of SHARE BUY BACK in theIndian corporate scenario.
Over 300 companies, including the Tatas, the Birlas andReliance, had passed resolutions -- taken shareholderspermission -- at their AGMs during the year 1997-1998.