Buy Back of Shares: A

Comparative Study with UK

and USA

- Submitted by Alpesh Upadhyay

pRn-21010241012
 The repurchase of outstanding shares by a
company in order to reduce the number of shares
Introduction on the market. Company will buy back shares
either to increase the value of shares still
available. or to eliminate any threats by
shareholders who may be looking for a controlling
stake.
 Objective

 To increase the promoter holdings

 Increase earning per share
 To pay surplus cash not required by business
 Itsafeguard against a hostile takeover by increasing promoters
holding.
 To support the share price when the share price, in the opinion of
the management is less than its fair value.
Conditions of Buy-back in India

1. Buy back of shares must be authorized by its articles.

2. A special resolution passed at general meeting.
3. Buy-back should not be more than 25% of the total paid up capital and free reserves of
the company.
4. Buy-back of equity shares in any financial year must not exceed 25% of its paid up
equity capital.
5. Debt-equity ratio should not fall below 2:1 after buy-back
6. All the shares must be fully paid up.
  Year of Emergence of Buy back of shares
Comparison of Buy  Authorization required under Article of
back Provision with association
 Nature of resolution approving buy back of
UK and USA shares.
 Buy back Limit
 Accounting and disclosures requirements
 Sources of Fund for buy back shares
 Solvency norms after buy back
 Penalty
 Conclusion
 Itcan be said that the three countries i.e. UK,USA and
India has some similar provisions as well as some
distinct features in regards of Buy back of shares, but
the legal provisions in UK is far more organised and
well regulated than that in India and the USA.
Thanking You