Buy Back Shares

Jul 26, 2011     Posted under: Investment

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What is Buy-Back?

Buy-back of shares refers to the repurchase of shared by the company from its shareholders. It could be done for a number of reasons, including increasing promoter holding, supporting the share value, countering a takeover bid of delisting from exchanges. Every buy-back offer has to be completed within 12months from the date of passing the resolution.

How to Tender Shares?

Information about a company’s buy-back is available with stock exchanges.

When a company announces a buy-back, it makes a public announcement through a notice published in national daily. The letter of offer and form of acceptance detailing the procedure is mailed to your registered address. You need to fill up the forms and mail it to the registrar within a specified time period. If you don’t receive the letter and forms, you can still tender your shares by sending an application on plain paper. You need to mention details such as your folio number, name, address, number of shares held, share certificate number, distinctive numbers, number of shares tendered, in the application and attach the original share certificate. In case of demat holding include the depository participant’s name (DP) and ID and your account number with DP.

Should Individual Tender Shares?

 It is not compulsory to accept a buy-back offer. However, if the offer is made for the purpose of delisting, it is advisable to tender. Post delisting, the company may no longer need to adhere to Securities and Exchange Board of India (SEBI) regulations and one may not be able to trade stock.

NitiN Kumar Jain

Nitin works in an IT MNC professionally but blogs and owns NKJ Live. He is also the co-owner of a professional start-up ARGHAM BYTES

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  • NitiN Kumar Jain

    Oh .. great info .. I wasn’t aware of this …

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