CORPORATE RESTRUCTURING – BUY BACK OF SHARES

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.... buy-back. Objective of Buy - Back The reasons for buy- back may be one or more of the following: * To improve earnings per share * To improve return on capital, return on net worth and to enhance the long term shareholder value * To provide an additional exit route to shareholders when shares are under valued or are 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 conditions * To service the equity more efficiently. Authority and Quantum of Buy back of Securities 1. Authority in the Articles - Buyback of securities should be auth....

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....alance sheet - Section 77AA * Where a company completes a buy-back of its shares or other specified securities under this section, it shall not make further issue of the same kind of shares including allotment of further shares under section 81(1)(a) or other specified securities within a period of six months except by way of bonus issue or in the discharge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares. Section 77A (8) * No buy back of securities should be undertaken while a petition for amalgamation is pending * No issue of any securities including bonus shares should be made till the closure of offer of buy back * Pro....

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....a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year of the date of declaration adopted by the Board, and signed by at least two directors of the company, one of whom shall be the managing director. Income Tax Aspects Section 46A of Income tax Act provides that where a shareholder or a holder of other specified securities the meaning assigned to it in section 77A of the Companies Act, 1956, receives any consideration from any company for purchase of its own shares or other specified securities held by such shareholder or holder of other specified securities, then, subject to the provisions of section 48, the difference between the cost of....