Tagbuyback

Buyback during Pendency of Amalgamation: SEBI Order in the Wipro Case

The SEBI (Buy-back of Securities) Regulations, 2018 states in regulation 24(ii) that a company shall not announce a buy-back when a scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act, 2013 is pending. Such a proscription against buy-back operates because a scheme of amalgamation is a material transaction and could potentially alter the fundamental...

Premium on Buyback: a Deductible Expenditure?

In an earlier post on this blog, Mr. Jayant Thakur had considered certain decisions of the Income Tax Appellate Tribunal (notably, Chemosyn v. ACIT) where the ITAT had held that “… premium paid by the company on buyback of shares of a warring shareholder group is deductible as business expenditure in the hands of the company…” It was pointed out in that post that the Tribunal had...

SEBI Amends Delisting, Takeovers and Buyback Regulations

[The following post is contributed by Yogesh Chande, who is an Associate Partner with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal. SEBI has with effect from 24 March 2015 amended the following regulations: (a)    SEBI (Delisting of Equity Shares) Regulations, 2009 (“Delisting Regulations”); (b) SEBI (Substantial Acquisition of Shares...

Proposed modifications to buyback provisions

SEBI has just placed a discussion paper on its website entitled “Proposed modifications to the existing framework for buy back through open market purchase” for public comments. Comments on the discussion paper have been solicited on or before January 31, 2013. Upon a review of the current regulations and studying the market dynamics, the key recommendations of the discussion paper are set out...

Buybacks and open offer – recent decision of SAT

Recently, on 21st November 2011, the Securities Appellate Tribunal (SAT) held that the increase in percentage holding of a person consequent to buyback of shares does not amount to acquisition and thus cannot result in an open offer. This is, in my view, a correct legal interpretation of the law (as also argued by me in an earlier post here). But SEBI had, in practice, taken a view that such...

Buyback and Takeover Regulations – Yet another development

See my earlier post on a recent decision of SEBI on whether increase in percentage holding consequent to buyback of shares would amount to “acquisition” under the Takeover Regulations. If that and earlier posts are reviewed, one would note that SEBI has taken a fairly consistent stand that such increase does amount to acquisition. Now, in a recent order granting exemption under the...

Buyback, increase in shareholding and open offer requirement

Yesterday’s decision of SEBI revives the discussion on whether an increase in shareholding on account of a buyback could result in an open offer. The issue can be explained mathematically as follows. A company, has, say, Rs. 100 of share capital. It carries out a buyback of Rs. 20 shares in which some shareholders do not participate fully. Since the share capital reduces to Rs. 80, the...

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