buy back offer

WHY DOES COMPANY BUY BACK?

Shares are bought back when the company has lot of cash on the balance sheet and no plans to invest the same in new projects or expansion

if the share price is unduly low company may buy the shares so that the value vs price advantage can be taken

Sometimes company may buy its shares in order that the promoter may consolidate their ownership and maintain majority in the company

How is buy back price determined?

In case of liquid or highly traded stocks the price is average price in last 15 days. In less liquid shares the price is 6 months average. There are other formulas also suggested by SEBI to determine the value

How do I offer my shares?

You should transfer your shares with the stock broker in the designated Dp account. Broker will offer the shares to company. In case your bid is accepted then money will be credit to your account. In case bid is rejected shares will be returned to you.

Regulatory Oversight

SEBI has regulations for government buy back of shares. Not more than 25% of shares can be acquired by the company. Company is expected to put money in escrow account to ensure payment to shareholders who have offered the shares

Just for information

At times companies give very poor price for buy back, you may not wish to sell, but if the company is going to get delisted then it is advisable to exit the company by offering in buy back