The Buyback of shares is governed by Sec 68, 69 and 70 of the Companies Act, 2013; and further by the Companies (Share Capital and Debentures) Rules, 2014. For Listed Companies, the SEBI Regulations for Buyback will also be applicable.

The listed Indian Equity space is seeing a plethora of buyback issues. Given the nervousness and uncertainty in this COVID-19 unreal reality it is not surprising that companies are resorting to buybacks to take advantage of low share prices and in an endeavour to re-assure shareholders.

Buybacks can be carried out in two ways:

• Shareholders may be presented with a tender offer whereby they have the option to submit (or tender) a portion or all of their shares within a certain time frame and at a premium to the current market price. This premium compensates investors for tendering their shares rather than holding on to them.
• Companies buy back shares on the open market over an extended period of time.

Advantages of Buyback:

• It is an alternative mode of reduction in capital without requiring approval of the Court/CLB(NCLT),
• To improve the earnings per share;
• To improve return on capital, return on net worth and to enhance the long-term shareholders value;
• To provide an additional exit route to shareholders when shares are undervalued or thinly traded;
• To enhance consolidation of stake in the company.
• To prevent unwelcome takeover bids;
• To return surplus cash to shareholders;
• To achieve optimum capital structure;
• To support share price during periods of sluggish market condition;
• To serve equity shareholders more efficiently.

Summary of Recent Buybacks:

All figures in Rs Crs except for face value and no. of shares: