buy back powerpoint presentation complete

7/29/2019 Buy Back PowerPoint Presentation Complete

1/22

COMPLIANCERELATING TOBUY BACK OFSHARES


2/22

INTRODUCTION OF TEAM MEMBERS

PRATIK SHAH(GROUP LEADER):WRO 0441853

&

PRAKASH GONDALIYA :WRO 0276004


3/22

REASON FOR SELECTING THIS TOPIC

During the course of trading and commerce we have many a

times come across the term Buy Back of Shares.

Most of the common people are not very well acquaintedwith this term, so to give a concise and brief knowledge

about the topic, we have chosen it.

One should know what Buy Back of Shares means and whatare the compliances to be followed , so as to understand its

financial impact on the company.


4/22

BUY BACK OF SHARES(Introduction)

Buy Back (or share repurchase) is the

reacquisition by a company of its own stock

.A corporation can repurchase its own stock by

distributing cash to existing shareholders inexchange for a fraction of the company's

outstanding equity; that is, cash is exchanged for

a reduction in the number of shares

outstanding.The company either retires therepurchased shares or keeps them as treasury

stocks, available for re-issuance.


5/22


6/22

OBJECTIVES..

To increase promoters holding

Increase earning per share

Rationalize the capital structure by writing off capital

not represented by available assets.

Support share value

.


7/22

To pay surplus cash not required by business

Tax advantages

Flexibility

Increasing financial leverage


8/22

SECTIONS

The provisions regulating buy back of shares are

contained in section 77A, 77AA and 77B of The

Companies Act,1956.

These were inserted by The Companies(Amendment) act,1999.

The Securities and exchange board of India (SEBI)

framed The SEBI(buy back of securities)

Regulations,1999 and The department of company

Affairs framed the rules for Private limited company

and Unlisted Public company.


9/22

RESOURCES OF BUY BACK

Free reserves

Securities premium account

Proceeds of any shares or other specified

securities


10/22


11/22

CONDITIONS OF BUY BACK

Articles of Association

Special resolution has to be passed in the general

meeting

Buy-back cannot be of more than twenty-fivepercent of the total paid-up capital and fee reserves

Ratio of the debt owed by the company is not morethan twice the capital and its free reserves


12/22

Default in any of the following

i. Repayment of deposit

ii. Redemption of debentures, or preference

sharesiii. Payment of dividend

iv. Repayment of any term loan

All the shares are fully paid-up


13/22


14/22

PROCEDURES A Company can propose to buy back its shares, after

passing of the Special/Board resolution. It has to

make a public announcement in at least one English

National Daily, one Hindi National daily and One

Regional Language Daily.

A public notice shall be given containing disclosures

as specified in Schedule I of the SEBI regulations.

A draft letter of offer shall be filed with SEBI through

a merchant Banker. The letter of offer shall then be

dispatched to the members of the company.


15/22

A copy of the Board resolution authorizing the buy

back shall be filed with the SEBI and stock exchanges.

The date of opening of the offer shall not be earlier

than seven days or later than 30 days after the

specified date

The buy back offer shall remain open for a period of

not less than 15 days and not more than 30 days.

A company opting for buy back through the public

offer or tender offer shall open an escrow Account.


16/22

ISSUES OF FURTHER SHARES

Every buy-back shall be completed within twelve

months from the date of passing the special

resolution or Board resolution as the case may be.

A company which has bought back any securitycannot make any issue of the same kind of securities

in any manner whether by way of public issue, rights

issue up to six months from the date of completion

of buy back.

Company shall file with the Registrar a declaration of

Solvency.


17/22

POSITIVE IMPACT

It could avert a hostile takeover bid by reducing

number of shares in circulation

Market generally interprets buy back as a positve

aspect Shareholders have a choice of deciding whether or

not to receive the payout by selling or holding their

shares,unlike a dividend payout


18/22

NEGATIVE IMPACT

A return of funds by way of a share buy back isless certain than an annual dividend stream

Possible mismanagement may arise if:o Too high a price is paid for repurchase of shares

o Cash resources are eroded to the level that could

lead to a risk of insolvency


19/22

PENALTY (u/s 621A )

If a company makes default in complying with the

provisions or any officer of the company who is in

default shall be punishable with:-

Imprisonment for a term which may extend to 2

years

or With fine which may extend to Rs.50,000/- or with

both


20/22

CONCLUSION

Buyback should be used as an opportunity to

exit only when there is concern over a

companys prospects or when the post

buyback free float is expected to shrinkconsiderably. In most of the cases, buyback do

offer the lure of an immediate benefit-but you

might be better off as a residual shareholder,and gain from a hike in the shares of assets

and profits of the business.


21/22

BIBLIOGRAPHY.

www.legalserviceindia.com

http://www.investopedia.com/terms/b/buyback.asp

http://en.wikipedia.org/wiki/Share_repurchase

http://www.sebi.gov.in/cms/sebi_data/commondocs

/bbreg_p.pdf
http://www.legalserviceindia.com/http://www.investopedia.com/terms/b/buyback.asphttp://en.wikipedia.org/wiki/Share_repurchasehttp://en.wikipedia.org/wiki/Share_repurchasehttp://www.investopedia.com/terms/b/buyback.asphttp://www.legalserviceindia.com/


22/22ANY QUESTION ????

buy back powerpoint presentation complete

Documents