A company buy back its shares in any one of the undermentioned manners
even without shareholders' resolution to the extent of 10% of paid up
equity capital and reserves. For 25% buy back, it has to get approved by
Shareholders Resolution as specified in Section 77 A of Companies Act,
1956.
- From the existing shareholders on a proportionate basis through
the tender offer;
- From open market through:
- Book building process
- Stock exchange,
- From odd lot holders.
The listed companies requires intimation to the stock exchange of
general meetings and resolutions passed thereof. The informations can be
obtained from the stock exchanges.
SEBI issues a press release and the offer document is put on the SEBI
website when buyback offer document or public announcement is filed.
FAQs on Buy Back of Securities
How does
one tender ones Shares for buyback, in the tender offer method?
The company will send a tender/offer form to the shareholders. He/She
will have to fill up the form as per the instructions of the company and
enclose the documents asked for.
How does one participate in the buyback
in case one does not receive the tender/offer form?
If one has not received the tender/offer form can make an application
on plain paper stating folio number, name, address, number of shares
held, share certificate number, distinctive numbers, number of shares
tendered, together with the original share certificate and tender it at
the collection centres/registrars.
Can you tender your shares for buyback
if you are not a registered shareholder?
Yes, but you have to submit the duly executed transfer deed for
transfer of shares in your name, along with the offer form and other
relevant documents. It should also be sent to the registrar to the
buyback offer.
What is the manner in which the company
decides the acceptances from each shareholders?
If the shares are tradable compulsorily in demat segment, the
acceptances from any investor shall be on a proportionate basis
irrespective of the number of shares tendered in the buyback, and
irrespective of whether shares are in physical or demat form.
If it is not then, the entire shares tendered being less than the
minimum market lot shall be accepted in full. Next, the acceptances will
be on proportionate basis in a manner to ensure that the acceptances are
in market lot. In this case, a draw of lots shall be done, as in public
issues.
When will the shareholder receive
intimation about acceptance of his shares?
Within 15 days from the closure of the offer.
When will the shareholder receive the
consideration/the share certificate?
Within 21 days from the closure of the buyback offer.
