Buyback of Shares (Law and Procedure)

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Description
In India, share buybacks became legal when the Securities and Exchange Board of India (SEBI) introduced the Buyback of Securities Regulations in 1998. A share buyback occurs when a company repurchases its own shares from the market. Companies may opt for share buybacks for several reasons, including:
1. Increase the Value of Remaining Shares
2. Return Profits to Investors
3. Improve Financial Ratios
4. Consolidate Voting Rights
5. Provide Liquidity in Emergencies 6. Restructure Debt-Equity Mix
7. Show Financial Strength
A share buyback is an essential tool that companies use to manage their finances, reward shareholders, and improve their market image. Given these benefits, the introduction of share buybacks in India's corporate sector has been welcomed by regulatory authorities and has received a positive response from Indian companies. It is seen as an effective way to enhance shareholder value and strengthen financial positions.
This book delves into several key issues concerning buybacks. It offers a comprehensive review of the theoretical foundation behind buybacks, providing readers with a clear understanding of the buyback mechanism. Additionally, it explores the legislative provisions governing share buybacks, along with the accounting and reporting requirements in India. The legislative framework and accounting/reporting standards ensure that share buybacks are executed in a transparent and regulated manner, with proper disclosures made to both investors and authorities.
I am pleased to present the first edition of this book on the Buyback of Shares. This work is the culmination of the practical experience I have gained over the past five years in my career as a Company Secretary. Drawing on real- world insights and industry practices, I have aimed to provide a comprehensive guide to share buybacks, covering both the regulatory framework and operational aspects. I trust this book will be a valuable resource for professionals, students, and anyone interested in understanding the intricacies of share buybacks in the corporate world.
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Table of Contents
Chapter 1. Introduction to Buyback of Own Securities
Chapter 2. Law Relating to Buyback of Own Securities
Chapter 3. Methods for Buyback of Own Securities
Chapter 4. Sources for Buyback of Own Securities
Chapter 5. Dematerialization and ISIN Requirement for Buyback of Own Securities
Chapter 6. Process and Conditions for Buyback of Own Securities
Chapter 7. Accounting Treatment with Journal Entries and Income Tax Provisions of Buyback
Chapter 8. Comparison of Buyback
Chapter 9. Restrictions on Buyback
Chapter 10. Frequently Asked Questions on Buyback of Shares and Case Law
Chapter 11. Forms in Buyback of Shares
Chapter 12. Schedules and FEMA Regulations
Chapter 13. Formats
Chapter 14. Board Resolution for Listed Company
Appendix 1. Relevant provisions of Companies Act, 2023
Appendix 2. Companies (Share Capital and Debentures) Rules, 2014- Relevant Rule & Forms
Appendix 3. Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018
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Author Details
CS Khushboo Patodi, MBA, B.Com. is a practicing Company Secretary with expertise in Company Law, SEBI regulations, and Stock Exchange compliances. She is actively engaged in the practice of corporate governance, legal advisory, and compliance services for various businesses.
With a strong background in financial analysis, corporate finance, and market strategy, Khushboo Patodi is a financial expert who brings extensive experience in investment analysis and strategic planning. Her professional journey reflects a deep understanding of both the legal and financial aspects of business operations, making her a trusted advisor in the fields of corporate law and financial compliance.