BUYBACK OF SHARES

----------K.N SUDARSHAN

CONTENTS OF THE PRESENTATION INTRODUCTION WHY BUYBACK ? CONDITIONS LIST OF THE COMPANIES CONCLUSIONS .

 Accordingly.INTRODUCTION  Buyback is a method of Cancellation of share capital. . a company can buyback its own shares to the extent of 25% of the paid up capital and free reserves.  It leads to reduction of share capital of a company.

 To eliminate odd Lots & Fractional Holding.  To prevent Hostile Takeover Bids. .  To increase the underlying share value.  To return surplus cash to Shareholders.WHY BUYBACK ?  To reduce Dilution of control.  To increase EPS.

‡ Tender offers ‡ Dutch auction ‡ Reverse Right issue ‡ Stock Exchange ‡ Repurchase of odd lots .SEBI GUIDELINES The Companies are Permitted to buyback the shares through the following moves««.

The companies are not permitted to buyback through negotiated deals.and private placements. . Promoters have been debarred from participating if the company opts to buyback shares through stock exchange route. The companies will have to specify the maximum price payable in the resolution seeking shareholders approval. Companies buying through stock exchanges must disclose Purchase details daily. The buyback should be done only in cash and an escrow account will have to be maintained by the merchant bankers. No company is allowed to withdraw the buyback offer once it has announced.spot transactions.

LIST OF COMPANIES ISSUER METHOD OPENIN G DATE 08-122000 Mar 02 Jul 01 July 02 Sept 02 PRICE % OF SHARES 49% 49% 49% 31% 49% Philips India ltd Cadbury India ltd Carrier Aircon Otis Elevator Britannia Tender Offer Tender Offer Tender Offer Tender Offer Tender Offer 105 500 100 320 750 .

CONCLUSION The best strategy to maintain the share price in a bear run is to buy back the shares from the open market at a premium over the prevailing market price. .

Sign up to vote on this title
UsefulNot useful