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Buy Back of shares

Anup Nemani (1 Points)

10 January 2021

How to know in advance that company will chose buy back option or not

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Anup

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7 Replies

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 10 January 2021

If company faces bankruptcy then company might call for buy back of shares

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ayusmita (Tax consultant) (5885 Points)
Replied 10 January 2021

There's are many reasons like when they use cash on hand to buy and retire some of its own shares in the open market.

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 10 January 2021

FOr a small company, shareholders can’t sell the shares, so it helps the share holders by buying back the share. For large companies, they buyback

when they have surplus cash from retained earnings

when a company wants to increase its eps

when a company wants to increase gearing as debt will rise

when a company wants to prevent a take over

when a company is going through capital restructuring

ayusmita (Tax consultant) (5885 Points)
Replied 10 January 2021

Agree with yasaswi 😊

sabyasachi mukherjee (27574 Points)
Replied 11 January 2021

Buy back of shares is a different concept which is being resorted when the company wants to dilute the holdings.
Now it depends the share holding pattern of the company.

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Kapadia Pravin (17259 Points)
Replied 11 January 2021

It's a decision by Board to go for buy back. NSE/BSE are informed about Board meeting and then about resolution passed. what do you mean by knowing in advance !! There are exchange restrictions on leak of such info. There are number of factors which are considered by management before such meeting and then announcement. SEBI NSE RBI etc have prescribed rules restrictions etc which are to be complied with.