Why do Companies buy back their Shares ?
April 28th, 2009
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The company can buy back its shares in any of the following manners :
1. From the existing shareholders on a proportionate basis through the tender offer;
2. From open market through:
a. Book building process
b. Stock exchange,
3. From odd lot holders.
How to know about companies proposing to buyback their shares?
1. Listed companies are required to intimate the stock exchange of general meetings and resolutions passed thereof. Hence, information on companies proposing to buyback shares may be obtained from the stock exchanges.
2. When buyback offer document or public announcement is filed with SEBI, SEBI issues a press release and the offer document is put on the SEBI website under primary market page under the head “buyback”.
Now the question – Why do Companies Buy Back their Shares ?
Buy-Back is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than market price. When it buys back, the number of shares outstanding in the market reduces and hence the market capitalisation
Read Complete article >> Why Companies Buy Back ?
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Categories: Investing Trends, Trading Basics
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