03-12-2012, 06:22 PM
Buy- Back of Shares
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Buy-Back of Shares means the purchase by the Company its own shares.Buy-Back is an important model of Capital Restructuring.
Purpose of Buy-Back:-
1) Improve Earning Per Share andimprove Return on Capital, Return on Net Worth and to enhance long term shareholder value and to enhance consolidation of stake in the company
2) Basically, the Buy-Back provisions are used to adjust its surplus cash which is not supposed to be used in near future.
Provisions of Buy-Back:-
• As per the provisions of Sections 77A of companies Act, 1956 a Company can Buy-Back its Shares.
• PTC being a listed Company has to Comply with the requirements of Section 77A of Companies Act, 1956 and SEBI ( Buy-Back ) of Equity Shares Regulations.
As per the above regulatory Requirements PTC can Buy-Back its shares subject to following:-
1) Articles of Company should have Power to Buy-Back- PTC AOA have this Power
2) Source of Funds :- a) Free-Reserves- (N.A. for PTC )
b) Securities Premium A/c- ( PTC can use this source)
c) Proceeds of new issue of shares- ( N.A. for PTC)