BUYBACK METHODS
Content
Buy Back of shares
y Sec 77 restricts companies whetther public or private
to purchase its own shares as it invoves permanent reduction of capital. y Sub sec 2 provides that no public co. give any final assistance in any shape towrds the purchase of its own shares or of its holding company except some cases
Buy Back of own securities
y Introduction of 3 new sections 77A, 77AA and 77B
enabled companis to buy back their securites . y Rationale for buy back of shares is that companies can buy back its shares because it reduces the number of shares outstanding and thus improving the EPS.
Features of Buy Back
1. 2. 3. 4. 5. 6. 7. 8. 9.
Funds out of which Buy Back may be Financed [Sec.77A(1)] Capital redemption Reserve Account [Sec.77A(2)] Methods of buyback[sec.77A(5)] Declaration of solvency[Sec.77A(6)] Physical destruction of securities[Sec.77A(7)] Further issue after buyback[Sec.77A(8)] Register of bought back shares [Sec.77A(9)] Return of buyback [Sec. 77A(10)] Penalty [sec.77A(11)]
Buy back Method
Tender Method. 2. Open market Purchases y Stock exchange purchase method y Dutch auction method
1.
y Sec 77 restricts companies whetther public or private
to purchase its own shares as it invoves permanent reduction of capital. y Sub sec 2 provides that no public co. give any final assistance in any shape towrds the purchase of its own shares or of its holding company except some cases
Buy Back of own securities
y Introduction of 3 new sections 77A, 77AA and 77B
enabled companis to buy back their securites . y Rationale for buy back of shares is that companies can buy back its shares because it reduces the number of shares outstanding and thus improving the EPS.
Features of Buy Back
1. 2. 3. 4. 5. 6. 7. 8. 9.
Funds out of which Buy Back may be Financed [Sec.77A(1)] Capital redemption Reserve Account [Sec.77A(2)] Methods of buyback[sec.77A(5)] Declaration of solvency[Sec.77A(6)] Physical destruction of securities[Sec.77A(7)] Further issue after buyback[Sec.77A(8)] Register of bought back shares [Sec.77A(9)] Return of buyback [Sec. 77A(10)] Penalty [sec.77A(11)]
Buy back Method
Tender Method. 2. Open market Purchases y Stock exchange purchase method y Dutch auction method
1.
