Buyback of Shares in India

Dr. Tanupa Chakraborty

Lecturer, Department of Commerce,
University of Calcutta

New Century Publications

New Delhi, India
 CONTENTS
Foreword -^ v
Preface ix

1. Introduction 1
2. Historical Perspective 14
2.1 Introduction
2.2 What is Share Buyback?
2.3 Reasons for Introduction of Buyback
Provisions in India
2.4 Buyback Distinguished from Capital Reduction
2.5 Buyback vs. Liquidation
2.6 Benefits of Buyback
2.7 When can Buyback be Undertaken?
2.8 Methods of Buyback
2.9 Treasury Operations
2.10 Emergence of Buyback Provisions in India
2.11 Summary

3. Buyback Scenario in India 47

3.1 Introduction
Part A: Legal Provisions and other Regulatory Measures
3.2 Buyback Provisions Enacted by the Companies
(Amendment) Act, 1999
3.3 Position after Introduction of Buyback Provisions in
the Companies Act, 1956
3.4 Securities and Exchange Board of India (SEBI)
Guidelines on Buyback of Shares by
Listed Indian Companies
Part B: Buyback Practices in India (Case Study)
3.5 Objectives
3.6 Sample Selection and Research Methodology
3.7 Measurement and Analysis of Data
3.8 Summary of Findings
Part C: Accounting and Reporting for Buyback
xii Buyback of Shares in India

3.9 Accounting Aspect of Buyback

3.10 Disclosure Requirements of Buyback Operations
3.11 Summary
Appendix A: Calculation of Book/Value per Share
Appendix B: Time-series Data of the Stock Market
Quotations of Sample Companies and the Corresponding
Index Values
Appendix C: Determination of Current Ratios and Liquid
Ratios of the Sample Companies
Appendix D: Determination of Debt/Equity Ratios of the
Sample Companies

4. Global Scenario 135

4.1 Introduction
4.2 Country-specific Provisions
4.3 Buyback Provisions and Practices in the USA
4.4 Buyback Provisions and Practices in the UK
4.5 Comparison of the Buyback Provisions
in the US, UK, and India
4.6 Summary

5. Procedures and Practices of Buyback of

Shares 174
5.1 Introduction
5.2 Deterrents to Buyback
5.3 A Critique of Sections 77A, 77AA and 77B of the
Companies (Amendment) Act, 1999
5.4 Pitfalls in SEBI (Buyback of Securities) Regulations
5.5 Summary

6. Suggestions and Conclusions 195

6.1 Summary and Conclusions
6.2 Improving Effectiveness of the Buyback Mechanism
6.3 Limitations
6.4 Scope for Further Research
Bibliography 211
Index 223