1) HUL announced a buyback of up to 2.25 crore shares at Rs. 280 per share utilizing up to Rs. 630 crore of its cash reserves.
2) The buyback will reduce HUL's total equity shares from 218.17 crore to around 174.54 crore, improving its key financial ratios like return on equity, return on assets, and earnings per share.
3) With the same profit after tax expected in FY2011, the buyback is expected to increase ROE from 0.85 to 1.08, ROA from 0.85 to 1.08, and EPS from Rs. 10.09 to Rs. 12.62.
The document discusses buy-back of shares by a company. It introduces buy-back and outlines the key reasons for companies to buy-back shares such as signaling effect and increasing earnings per share. It also discusses the provisions governing buy-back under the Companies Act, 2013 including conditions, process, restrictions and tax treatment. Finally, it describes various methods of buy-back for both listed and unlisted companies.
Preference shares represent partial ownership in a company and carry preferential rights to dividends and assets over common stock. Preference shares can be redeemed by the company at par or at a premium using profits, reserves, or proceeds from new share issues. Upon redemption, the company must transfer an amount equal to the nominal value of shares redeemed to a capital redemption reserve account to maintain capital levels.
This document discusses concepts related to buy-back of shares and redemption of preference shares including accounting treatment and income tax applications. It provides details on various methods of share buy-backs including open market purchases, tender offers, and selective buy-backs. It also discusses rules for redemption of preference shares including use of profits or fresh share issues. The rationale for allowing buy-backs under section 77A of Indian companies act is explained as making markets more vibrant.
Introduction and Accounting for Buy-back of Shares in India as per the Companies Act 2013 and other rules.
It will be useful for the students of B. Com., B.Com.(H), CA, CS and other professional courses, studying Corporate Accounting.
This document discusses buybacks of shares by companies. It begins by providing context on internal restructuring and how section 100-105 of the Companies Act governs capital reduction. It then explains that section 77A, 77B, and 77AA now allow companies to buy back their own shares. The rest of the document defines various terms related to share buybacks and discusses the advantages and mechanics of companies conducting share buybacks.
provisions and restrictions of buy back of sharessangeeta saini
The document provides information about buybacks of shares by companies. It discusses the methods of buybacks, provisions and restrictions under the Companies Act 2013, and examples. Specifically, it notes that companies can buy back shares from existing shareholders proportionately, from the open market, or by purchasing employee shares. Restrictions include the buyback being authorized by articles and below 25% of paid-up capital and free reserves. An example is provided of Reliance Industries announcing a Rs. 10,440 crore buyback of 12 crore shares at Rs. 870 per share.
Preference shares represent partial ownership in a company and carry preferential rights to dividends and assets. Preference shareholders receive dividends first before common shareholders and do not have voting rights. Preference shares can be redeemed either through company profits, issuing new shares, or a combination. When redeemed through profits, an equivalent amount must be transferred to a capital redemption reserve account.
The document discusses buy-back of shares by a company. It introduces buy-back and outlines the key reasons for companies to buy-back shares such as signaling effect and increasing earnings per share. It also discusses the provisions governing buy-back under the Companies Act, 2013 including conditions, process, restrictions and tax treatment. Finally, it describes various methods of buy-back for both listed and unlisted companies.
Preference shares represent partial ownership in a company and carry preferential rights to dividends and assets over common stock. Preference shares can be redeemed by the company at par or at a premium using profits, reserves, or proceeds from new share issues. Upon redemption, the company must transfer an amount equal to the nominal value of shares redeemed to a capital redemption reserve account to maintain capital levels.
This document discusses concepts related to buy-back of shares and redemption of preference shares including accounting treatment and income tax applications. It provides details on various methods of share buy-backs including open market purchases, tender offers, and selective buy-backs. It also discusses rules for redemption of preference shares including use of profits or fresh share issues. The rationale for allowing buy-backs under section 77A of Indian companies act is explained as making markets more vibrant.
Introduction and Accounting for Buy-back of Shares in India as per the Companies Act 2013 and other rules.
It will be useful for the students of B. Com., B.Com.(H), CA, CS and other professional courses, studying Corporate Accounting.
This document discusses buybacks of shares by companies. It begins by providing context on internal restructuring and how section 100-105 of the Companies Act governs capital reduction. It then explains that section 77A, 77B, and 77AA now allow companies to buy back their own shares. The rest of the document defines various terms related to share buybacks and discusses the advantages and mechanics of companies conducting share buybacks.
provisions and restrictions of buy back of sharessangeeta saini
The document provides information about buybacks of shares by companies. It discusses the methods of buybacks, provisions and restrictions under the Companies Act 2013, and examples. Specifically, it notes that companies can buy back shares from existing shareholders proportionately, from the open market, or by purchasing employee shares. Restrictions include the buyback being authorized by articles and below 25% of paid-up capital and free reserves. An example is provided of Reliance Industries announcing a Rs. 10,440 crore buyback of 12 crore shares at Rs. 870 per share.
Preference shares represent partial ownership in a company and carry preferential rights to dividends and assets. Preference shareholders receive dividends first before common shareholders and do not have voting rights. Preference shares can be redeemed either through company profits, issuing new shares, or a combination. When redeemed through profits, an equivalent amount must be transferred to a capital redemption reserve account.
The document discusses buybacks of shares by two companies, Binani Cement Ltd and Hindustan Unilever Ltd. Binani Cement Ltd is issuing a public announcement for a buyback of shares in compliance with SEBI regulations, with a closure date of August 10, 2010. Hindustan Unilever's board approved a share buyback of up to Rs. 280 per share not exceeding Rs. 630 crore, as announced last week. The company had cash and bank balances of Rs. 2102.38 crore as of March 31.
This document provides an overview of buybacks of shares and securities under various legal frameworks. It begins with definitions of key terms like "buyback" and discusses the history and rationale of buybacks in India. It then compares buyback regulations in the US, UK, and India. The US section outlines the main methods of open market, private, and tender offer repurchases allowed under SEC Rule 10b-18. Benefits of buybacks for companies and shareholders are increasing share price and EPS while returning excess cash. Overall the document provides a comprehensive introduction and comparison of buyback laws and practices.
This document discusses the redemption of debentures by companies. It defines redemption as the repayment of debentures to debenture holders. Redemption can occur at maturity, before maturity if allowed, or through conversion to shares. Companies can redeem debentures through lump sum payment, by draw of lots, purchasing in the open market, or conversion. A debenture redemption reserve must be created under SEBI guidelines to fund redemption. The document provides examples of journal entries to record redemption of debentures at par and premium amounts.
- Companies buy back their own shares to increase the value of remaining shares by reducing supply, or to eliminate threats from shareholders seeking control.
- There are legal requirements for buybacks in India including passing a special shareholder resolution, limits on percentage of shares/capital that can be bought back, and filing documents with regulatory authorities.
- The key methods for conducting a buyback include open market purchases, Dutch auctions, and offers made to existing shareholders on a proportional basis. Companies must follow procedures for making offers, accepting tenders, payment for shares, and cancelling repurchased shares.
This document discusses bonus shares in India. It defines bonus shares as shares issued to existing shareholders out of accumulated profits and reserves. Bonus shares are fully paid and renunciation rights do not apply. Companies can issue bonus shares from reserves, securities premium, and capital redemption reserve. Bonus shares expand capital base, retain cash, add reputation, and make paid-up capital reflect actual capital employed. Advantages are retaining cash for business and more realistic capital structure for companies, while shareholders benefit from increased share numbers and getting back accumulated profits.
The document outlines SEBI regulations regarding buyback of securities by listed companies in India. It discusses various methods of buyback including tender offers to shareholders on a proportionate basis, from the open market through book building or stock exchange, and from odd lot holders. It specifies various procedural requirements such as filing of resolutions, public announcements, record dates, payment of consideration, and extinguishment of shares post-buyback. Key requirements include making the buyback through a tender offer process, reserving 15% of shares for small shareholders, keeping 25-35% of consideration in an escrow account, and ensuring compliance with stock exchange guidelines for open market buybacks.
This document discusses various methods of share repurchase by companies, including open market purchases, fixed price tender offers, Dutch auctions, and selective buybacks. It provides a case study of Berger Paints' share buyback program in 2005, where the company offered to purchase up to 3098333 shares at a maximum price of Rs. 60 per share. The buyback had a positive impact on the company's earnings per share and shareholder value. Restrictions on buybacks under Indian law are also outlined, as well as some examples of major buyback programs by companies like Reliance in the future. In conclusion, the document states buybacks should only be used to exit a company when its prospects are uncertain or
The document provides an overview of 12 recent open offer cases in India, including the target company, acquirer, number of shares and percentage being acquired, and reason for the open offer such as share purchase agreements or preferential allotments. Intermediaries assisting with the open offers such as managers and registrars are also listed for each case. The open offers range from acquisitions of 20% to over 37.5% of company shares and voting capital.
Issue of debentures by N. Bala Murali Krishnabala13128
The document discusses debentures, which are instruments issued by a company to raise funds through loans. It defines debentures and explains why companies issue them instead of shares. It then describes the different types of debentures based on security, redemption, negotiability, convertibility, priority, and coupon/interest rate. The document also covers the accounting treatment for issuing debentures for cash, premium, discount, as collateral, or for consideration other than cash. It discusses oversubscription of debentures and conditions for redemption. Finally, it provides journal entries for recording interest payment on debentures.
This document discusses debentures, which are instruments that companies issue to borrow money. It defines debentures as written documents acknowledging a debt that contains terms for repayment of principal and payment of interest. The document outlines different types of debentures based on security, tenure, convertibility, coupon rate, and registration. It also distinguishes debentures from shares and discusses how debentures can be issued for cash, including journal entries for issues at par, at a discount, and at a premium.
The document discusses share buybacks by companies. It defines a share buyback as a company repurchasing its own outstanding shares to reduce the number on the market. This can increase the value of remaining shares or eliminate threats from shareholders seeking control. The document outlines the objectives, conditions, sources of funding, procedures, and penalties for buybacks under Indian law. It notes buybacks can enable faster achievement of capital structure goals but may also signal mismanagement if overpaid for or cash is excessively eroded.
The document discusses various topics related to the issuance of shares by companies, including:
1) Shares can be issued at a premium or discount to face value. When issued at a premium, a securities premium account is created to record the excess received. Premium can be used for bonus issues or writing off expenses. Discount is recorded as a capital loss.
2) Shares may be forfeited if the shareholder fails to pay calls. Amounts received are transferred to a share forfeiture account. Forfeited shares can be reissued.
3) Oversubscription occurs when applications exceed shares offered. Companies typically allocate shares on a pro-rata basis in this situation.
The document discusses the stock market and key terms related to buying and selling shares. It defines different types of shares like equity and preference shares, as well as bonds. It describes the primary and secondary markets for shares and processes like initial public offerings, rights issues, and book building. It provides statistics on market participants and turnover. Finally, it discusses the roles of different players like brokers, stock exchanges, and regulators in the stock market.
Preferential share issue & redemption shubhamShubham Kumar
The document discusses various types of preference shares including cumulative, non-cumulative, participating, convertible, redeemable, and irredeemable shares. It also describes the accounting treatment for issuing and redeeming preference shares such as creating a capital redemption reserve. Key points include that preference shareholders have priority for fixed dividend payments and return of capital, and redeemable preference shares must be redeemed within 20-30 years depending on their purpose.
The document discusses various types of preference shares such as cumulative, non-cumulative, redeemable, non-redeemable, convertible, and participating shares. It also covers the accounting treatment for redeeming preference shares, including transferring profits to a capital redemption reserve equal to the nominal value of shares redeemed. The capital redemption reserve can be used to issue bonus shares. Securities premium may be used to write off any premium paid to redeem preference shares.
The document discusses stock buybacks, also known as share repurchases, by companies. It provides details on the various methods and regulations around companies purchasing their own outstanding shares to reduce the total number of shares available on the market. Key points include that buybacks can increase share value for remaining shareholders and defend against hostile takeovers, but may also imply the company sees its stock as undervalued or lacks growth opportunities.
Here are the journal entries and balance sheet:
Journal Entries:
1. Bank A/c Dr. Rs. 1,80,000
To Share Application A/c Rs. 1,80,000
(Application money received on 6,000 shares @ Rs. 30 per share)
2. Share Application A/c Dr. Rs. 1,80,000
Share Allotment A/c Dr. Rs. 1,20,000
To Equity Share Capital A/c Rs. 6,00,000
(Application and allotment money transferred to share capital)
3. Bank A/c Dr. Rs. 1,20,000
To Share Allotment A/
Sample Silicon Valley Series A Term Sheet from DLA Piper [SVNewTech]Vinnie Lauria
This is a sample silicon valley Series A term sheet. Presented at the January Silicon Valley New Tech Meetup.
Presented by Brad Rock, partner at DLA Piper.
Full presentation with this sample term sheet are available - http://www.vinnie.net/2010/01/08/silicon-valley-term-sheets-presented-by-brad-rock-at-the-svnewtech/
http://www.dlapiper.com/
1) A debenture is a document issued by a company acknowledging a debt owed to the holder of the debenture. Debentures contain a promise to repay the principal amount on a specified date and pay interest at a fixed rate periodically.
2) Debentures can be issued by companies in exchange for cash, as collateral security for loans, or as consideration for purchases. Accounting entries are made to record the issue of debentures and receipt of any premium or discount.
3) Interest payment on debentures is recorded through debiting an Interest on Debentures account and crediting amounts to Debenture Holders and tax authorities. Accrued interest is tracked separately
Corporate restructuring refers to changes in ownership, business mix, assets, and alliances to enhance shareholder value. It may involve ownership, business, or assets restructuring through mergers, acquisitions, divestitures, strategic alliances, joint ventures, employee stock ownership plans, or leverage buyouts. The main motives for restructuring include limiting competition, achieving economies of scale, and gaining access to new markets. Valuation methods like discounted cash flow are used to evaluate restructuring transactions.
This document provides information on initial public offerings (IPOs) including key terms, the book building process, and differences between fixed price and book built issues. It discusses how IPOs allow companies to raise funds from the public market for the first time. In a book built issue, the price is determined through investor demand at various price levels, while in a fixed price issue the company freely determines the price upfront.
The document discusses buybacks of shares by two companies, Binani Cement Ltd and Hindustan Unilever Ltd. Binani Cement Ltd is issuing a public announcement for a buyback of shares in compliance with SEBI regulations, with a closure date of August 10, 2010. Hindustan Unilever's board approved a share buyback of up to Rs. 280 per share not exceeding Rs. 630 crore, as announced last week. The company had cash and bank balances of Rs. 2102.38 crore as of March 31.
This document provides an overview of buybacks of shares and securities under various legal frameworks. It begins with definitions of key terms like "buyback" and discusses the history and rationale of buybacks in India. It then compares buyback regulations in the US, UK, and India. The US section outlines the main methods of open market, private, and tender offer repurchases allowed under SEC Rule 10b-18. Benefits of buybacks for companies and shareholders are increasing share price and EPS while returning excess cash. Overall the document provides a comprehensive introduction and comparison of buyback laws and practices.
This document discusses the redemption of debentures by companies. It defines redemption as the repayment of debentures to debenture holders. Redemption can occur at maturity, before maturity if allowed, or through conversion to shares. Companies can redeem debentures through lump sum payment, by draw of lots, purchasing in the open market, or conversion. A debenture redemption reserve must be created under SEBI guidelines to fund redemption. The document provides examples of journal entries to record redemption of debentures at par and premium amounts.
- Companies buy back their own shares to increase the value of remaining shares by reducing supply, or to eliminate threats from shareholders seeking control.
- There are legal requirements for buybacks in India including passing a special shareholder resolution, limits on percentage of shares/capital that can be bought back, and filing documents with regulatory authorities.
- The key methods for conducting a buyback include open market purchases, Dutch auctions, and offers made to existing shareholders on a proportional basis. Companies must follow procedures for making offers, accepting tenders, payment for shares, and cancelling repurchased shares.
This document discusses bonus shares in India. It defines bonus shares as shares issued to existing shareholders out of accumulated profits and reserves. Bonus shares are fully paid and renunciation rights do not apply. Companies can issue bonus shares from reserves, securities premium, and capital redemption reserve. Bonus shares expand capital base, retain cash, add reputation, and make paid-up capital reflect actual capital employed. Advantages are retaining cash for business and more realistic capital structure for companies, while shareholders benefit from increased share numbers and getting back accumulated profits.
The document outlines SEBI regulations regarding buyback of securities by listed companies in India. It discusses various methods of buyback including tender offers to shareholders on a proportionate basis, from the open market through book building or stock exchange, and from odd lot holders. It specifies various procedural requirements such as filing of resolutions, public announcements, record dates, payment of consideration, and extinguishment of shares post-buyback. Key requirements include making the buyback through a tender offer process, reserving 15% of shares for small shareholders, keeping 25-35% of consideration in an escrow account, and ensuring compliance with stock exchange guidelines for open market buybacks.
This document discusses various methods of share repurchase by companies, including open market purchases, fixed price tender offers, Dutch auctions, and selective buybacks. It provides a case study of Berger Paints' share buyback program in 2005, where the company offered to purchase up to 3098333 shares at a maximum price of Rs. 60 per share. The buyback had a positive impact on the company's earnings per share and shareholder value. Restrictions on buybacks under Indian law are also outlined, as well as some examples of major buyback programs by companies like Reliance in the future. In conclusion, the document states buybacks should only be used to exit a company when its prospects are uncertain or
The document provides an overview of 12 recent open offer cases in India, including the target company, acquirer, number of shares and percentage being acquired, and reason for the open offer such as share purchase agreements or preferential allotments. Intermediaries assisting with the open offers such as managers and registrars are also listed for each case. The open offers range from acquisitions of 20% to over 37.5% of company shares and voting capital.
Issue of debentures by N. Bala Murali Krishnabala13128
The document discusses debentures, which are instruments issued by a company to raise funds through loans. It defines debentures and explains why companies issue them instead of shares. It then describes the different types of debentures based on security, redemption, negotiability, convertibility, priority, and coupon/interest rate. The document also covers the accounting treatment for issuing debentures for cash, premium, discount, as collateral, or for consideration other than cash. It discusses oversubscription of debentures and conditions for redemption. Finally, it provides journal entries for recording interest payment on debentures.
This document discusses debentures, which are instruments that companies issue to borrow money. It defines debentures as written documents acknowledging a debt that contains terms for repayment of principal and payment of interest. The document outlines different types of debentures based on security, tenure, convertibility, coupon rate, and registration. It also distinguishes debentures from shares and discusses how debentures can be issued for cash, including journal entries for issues at par, at a discount, and at a premium.
The document discusses share buybacks by companies. It defines a share buyback as a company repurchasing its own outstanding shares to reduce the number on the market. This can increase the value of remaining shares or eliminate threats from shareholders seeking control. The document outlines the objectives, conditions, sources of funding, procedures, and penalties for buybacks under Indian law. It notes buybacks can enable faster achievement of capital structure goals but may also signal mismanagement if overpaid for or cash is excessively eroded.
The document discusses various topics related to the issuance of shares by companies, including:
1) Shares can be issued at a premium or discount to face value. When issued at a premium, a securities premium account is created to record the excess received. Premium can be used for bonus issues or writing off expenses. Discount is recorded as a capital loss.
2) Shares may be forfeited if the shareholder fails to pay calls. Amounts received are transferred to a share forfeiture account. Forfeited shares can be reissued.
3) Oversubscription occurs when applications exceed shares offered. Companies typically allocate shares on a pro-rata basis in this situation.
The document discusses the stock market and key terms related to buying and selling shares. It defines different types of shares like equity and preference shares, as well as bonds. It describes the primary and secondary markets for shares and processes like initial public offerings, rights issues, and book building. It provides statistics on market participants and turnover. Finally, it discusses the roles of different players like brokers, stock exchanges, and regulators in the stock market.
Preferential share issue & redemption shubhamShubham Kumar
The document discusses various types of preference shares including cumulative, non-cumulative, participating, convertible, redeemable, and irredeemable shares. It also describes the accounting treatment for issuing and redeeming preference shares such as creating a capital redemption reserve. Key points include that preference shareholders have priority for fixed dividend payments and return of capital, and redeemable preference shares must be redeemed within 20-30 years depending on their purpose.
The document discusses various types of preference shares such as cumulative, non-cumulative, redeemable, non-redeemable, convertible, and participating shares. It also covers the accounting treatment for redeeming preference shares, including transferring profits to a capital redemption reserve equal to the nominal value of shares redeemed. The capital redemption reserve can be used to issue bonus shares. Securities premium may be used to write off any premium paid to redeem preference shares.
The document discusses stock buybacks, also known as share repurchases, by companies. It provides details on the various methods and regulations around companies purchasing their own outstanding shares to reduce the total number of shares available on the market. Key points include that buybacks can increase share value for remaining shareholders and defend against hostile takeovers, but may also imply the company sees its stock as undervalued or lacks growth opportunities.
Here are the journal entries and balance sheet:
Journal Entries:
1. Bank A/c Dr. Rs. 1,80,000
To Share Application A/c Rs. 1,80,000
(Application money received on 6,000 shares @ Rs. 30 per share)
2. Share Application A/c Dr. Rs. 1,80,000
Share Allotment A/c Dr. Rs. 1,20,000
To Equity Share Capital A/c Rs. 6,00,000
(Application and allotment money transferred to share capital)
3. Bank A/c Dr. Rs. 1,20,000
To Share Allotment A/
Sample Silicon Valley Series A Term Sheet from DLA Piper [SVNewTech]Vinnie Lauria
This is a sample silicon valley Series A term sheet. Presented at the January Silicon Valley New Tech Meetup.
Presented by Brad Rock, partner at DLA Piper.
Full presentation with this sample term sheet are available - http://www.vinnie.net/2010/01/08/silicon-valley-term-sheets-presented-by-brad-rock-at-the-svnewtech/
http://www.dlapiper.com/
1) A debenture is a document issued by a company acknowledging a debt owed to the holder of the debenture. Debentures contain a promise to repay the principal amount on a specified date and pay interest at a fixed rate periodically.
2) Debentures can be issued by companies in exchange for cash, as collateral security for loans, or as consideration for purchases. Accounting entries are made to record the issue of debentures and receipt of any premium or discount.
3) Interest payment on debentures is recorded through debiting an Interest on Debentures account and crediting amounts to Debenture Holders and tax authorities. Accrued interest is tracked separately
Corporate restructuring refers to changes in ownership, business mix, assets, and alliances to enhance shareholder value. It may involve ownership, business, or assets restructuring through mergers, acquisitions, divestitures, strategic alliances, joint ventures, employee stock ownership plans, or leverage buyouts. The main motives for restructuring include limiting competition, achieving economies of scale, and gaining access to new markets. Valuation methods like discounted cash flow are used to evaluate restructuring transactions.
This document provides information on initial public offerings (IPOs) including key terms, the book building process, and differences between fixed price and book built issues. It discusses how IPOs allow companies to raise funds from the public market for the first time. In a book built issue, the price is determined through investor demand at various price levels, while in a fixed price issue the company freely determines the price upfront.
- Share repurchases, also known as buybacks, refer to a company purchasing its own shares from shareholders. This provides an exit option for shareholders and can maximize shareholder wealth.
- Companies may engage in buybacks to correct over-capitalization, shore up management stakes, or provide an exit mechanism for shareholders. Regulations in India govern buybacks by listed and unlisted companies, requiring compliance with pricing guidelines, timelines, and other procedures.
This document provides an overview and analysis of Power Financial Corporation's annual report for 2009-10. It begins with an introduction to PFC, describing it as a public financial institution dedicated to power sector financing. It then outlines the company's balance sheet, discussing key line items such as share capital, reserves and surplus, loans, and assets. Several financial ratios are also analyzed. The document provides important high-level information about PFC's financial position and performance according to its annual report.
Advance Accounting b.com part 2 chapter 5 notes Mehar Irfan
The document provides information about accounting for company reconstruction and capital reduction in 3 sections. It begins by outlining the syllabus and exam questions on the topic. Next, it defines and provides examples of journal entries for capital reduction, including reducing share capital value and writing off accounts. Finally, it includes practice questions and solutions for journal entries and revised balance sheets after reconstruction.
The document discusses buyback of shares by various companies. It provides details such as company name, buyback price per share, meeting date for approval and record date for various companies. It then provides more details about Indiabulls Real Estate's buyback offer including offer size, number of shares, buyback price and type of buyback. Finally, it discusses the concept of buyback of shares by a company in general and some objectives and advantages of share buyback.
1. Companies invest in other companies for reasons like safety, cash needs, investment returns, influence, and control.
2. Securities are classified as debt, equity, or hybrid and can be held-to-maturity, available-for-sale, or trading.
3. The accounting treatment for securities depends on their classification and includes recognizing interest revenue, dividends, and changes in fair value.
The document discusses buy-back of shares by companies. It introduces key aspects of buy-back such as reasons, provisions, and methods. Buy-back allows companies to purchase their own shares and can benefit shareholders through increased earnings per share and returns. Companies must follow regulatory requirements set by acts and exchanges regarding process, pricing, and disclosures. Methods include tender offer, open market, and odd-lot purchases. An example buy-back by Bayer Cropscience is provided.
This document provides an overview of capital structure, including definitions, components, and calculations related to debt, equity, and ratios. It defines capital structure as the permanent financing of a firm through long-term debt, preferred stock, and net worth. It discusses the meaning and features of debt and equity, including their merits and demerits. It also explains how to calculate debt to equity ratios using information from a company's balance sheet. Finally, it covers the significance of debt-equity mix, operating leverage, financial leverage, and combined leverage.
Corporations are legal entities that allow for ownership shares to be traded publicly. They have a separate legal existence from owners and can raise large amounts of capital through stock sales. Ownership is represented by shares of stock. Corporations are controlled by shareholders who elect a board of directors to oversee management. They provide advantages like limited liability but are also subject to double taxation.
The document discusses different types of amalgamation and reconstruction between companies. Amalgamation can occur through a merger where two companies combine to form a new company, or through absorption where one company takes over another existing company. Amalgamation in the nature of a merger involves the transfer of all assets and liabilities of the transferor company to the transferee company, with shareholders of the transferor receiving equity in the transferee. Amalgamation in the nature of a purchase can occur if the merger conditions are not fully met. Internal reconstruction only impacts one company, while external reconstruction involves at least two companies with one taking over the assets and liabilities of another.
This document discusses dividend policy and various related concepts. It defines dividends as distributions from company profits to shareholders. A dividend policy determines how much a company will pay out to shareholders. Dividend dates include the record, declaration, ex-dividend, and payment dates. The types of dividends covered are cash, property, liability, and stock dividends. The document also discusses different dividend policies and factors that affect dividend amounts.
The document discusses capital structure and its key components - debt, equity shares, and debt-equity ratio. It defines capital structure as the long-term financing of a firm through debt, preferred stock, and net worth. Debt provides benefits like tax advantages but also risks like compulsory interest and principal payments. Equity shares are considered ownership capital and provide benefits like no repayment compulsions, but have risks like volatility. The debt-equity ratio calculation and its importance is also covered along with operating and financial leverage.
This document provides an overview of shares, share capital, types of shares and their advantages and disadvantages. It discusses equity shares, preference shares, and debentures. It also provides examples of an initial public offering (IPO) and further public offering (FPO) to illustrate how companies issue shares. The key topics covered include the meaning of shares and share capital, types of shares such as equity and preference shares, how shares are issued, the process of IPOs and FPOs, and examples of companies that have undertaken IPOs and FPOs.
Ratio analysis involves calculating and comparing various financial ratios to evaluate a company's profitability, liquidity, asset use efficiency, and financial stability. Key ratios include return on investment, return on equity, debt-to-equity, and current ratio. Calculating ratios from multiple periods or against industry benchmarks provides insights into a company's performance over time and relative to its peers.
Ratio analysis involves calculating and comparing various financial ratios to evaluate a company's profitability, liquidity, asset use efficiency, and financial stability. Key ratios include return on investment, return on equity, debt-to-equity, and current ratio. Calculating ratios from multiple periods or against industry benchmarks provides insights into a company's performance over time and relative to its peers.
The document discusses buyback of shares by a company. It defines buyback as a company repurchasing its own shares. The objectives of buyback include increasing promoter holdings, improving earnings per share, and paying surplus cash. Companies can buyback shares through tender offers to shareholders, purchasing on the open market, or through book building. Strict conditions apply, including board and shareholder approvals, maintaining debt-equity ratios, and extinguishing repurchased shares within 7 days. Regulations cover pricing, timelines, disclosure requirements, and prohibitions.
The document discusses issues related to share capital, including repurchases or buybacks of equity shares by a company. It explains two methods for accounting for share buybacks - the share retirement method and treasury share method. It also covers share dividends, share splits, share rights, and the statement of changes in equity. Several illustrations are provided to demonstrate journal entries for share buybacks and subsequent distributions of treasury shares under each method.
Our “ESOP Business Model” presentation covers the current regulatory environment, primary benefits, transaction structuring, business valuation standards, accounting rules and other critical issues to know when considering an ESOP.
This document discusses share buybacks by companies in India. It defines a share buyback as a company repurchasing its own outstanding shares to reduce the number on the market. It then outlines the objectives, conditions, procedures and sources of funding for buybacks according to Indian law. An example is given of a buyback by Reliance Energy and the positive impact on its share price. Both potential positive and negative aspects of buybacks are mentioned.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
The Impact of Generative AI and 4th Industrial RevolutionPaolo Maresca
This infographic explores the transformative power of Generative AI, a key driver of the 4th Industrial Revolution. Discover how Generative AI is revolutionizing industries, accelerating innovation, and shaping the future of work.
Confirmation of Payee (CoP) is a vital security measure adopted by financial institutions and payment service providers. Its core purpose is to confirm that the recipient’s name matches the information provided by the sender during a banking transaction, ensuring that funds are transferred to the correct payment account.
Confirmation of Payee was built to tackle the increasing numbers of APP Fraud and in the landscape of UK banking, the spectre of APP fraud looms large. In 2022, over £1.2 billion was stolen by fraudsters through authorised and unauthorised fraud, equivalent to more than £2,300 every minute. This statistic emphasises the urgent need for robust security measures like CoP. While over £1.2 billion was stolen through fraud in 2022, there was an eight per cent reduction compared to 2021 which highlights the positive outcomes obtained from the implementation of Confirmation of Payee. The number of fraud cases across the UK also decreased by four per cent to nearly three million cases during the same period; latest statistics from UK Finance.
In essence, Confirmation of Payee plays a pivotal role in digital banking, guaranteeing the flawless execution of banking transactions. It stands as a guardian against fraud and misallocation, demonstrating the commitment of financial institutions to safeguard their clients’ assets. The next time you engage in a banking transaction, remember the invaluable role of CoP in ensuring the security of your financial interests.
For more details, you can visit https://technoxander.com.
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
13 Jun 24 ILC Retirement Income Summit - slides.pptxILC- UK
ILC's Retirement Income Summit was hosted by M&G and supported by Canada Life. The event brought together key policymakers, influencers and experts to help identify policy priorities for the next Government and ensure more of us have access to a decent income in retirement.
Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
2. MEANING
OBJECTIVES OF BUYBACK
PROVISIONS UNDER THE COMPANIES ACT, 1956
SEBI REGULATIONS, 1998
EFFECTS OF BUYBACK OF SHARES
COMPANY SHAREHOLDERS
IMPROVEMENT IN THE FINANCIAL RATIOS
CASE STUDY – HUL LTD
3.
4.
5. • BALANCE SHEET OF A COMPANY BEFORE BUYBACK:
Liabilities Amt. Assets Amt.
Equity 1,00,000 Fixed Assets 6,00,000
Reserves 1,00,000 Current Assets 3,00,000
Long term debt 2,00,000 Cash 1,00,000
Bank Loan 2,00,000
Current 4,00,000
Liabilities
TOTAL 10,00,000 TOTAL 10,00,000
Net Profit after tax (NPAT)= Rs. 10,00,000
If the company buys back 50,000 shares through cash, cash as well
as the outstanding equity will decrease by Rs. 50,000.
6. Before Buyback After Buyback
• ROE= Net Profit After tax • ROE= 10,00,000 = 20
Shareholder’s equity 50,000
= 10,00,000 = 10
1,00,000 • ROA= 10,00,000 = 1.05
9,50,000
• ROA= Net Profit After tax
Total Assets
• EPS = 10,00,000 = 20
= 10,00,000 = 1
10,00,000 50,000
• EPS= NPAT- Preference dividend
No. of equity shares
= 10,00,000 = 10
1,00,000
7.
8.
9.
10. • The buy-back is authorized by the articles.
a
• Special resolution
b
• The buy back is less than 25% of total paid up equity capital and free
c reserves.
• Maintaining debt equity ratio: 2:1
d
• All the shares or other specified securities for buy-back are fully paid-
e up.
• For listed shares as per guidelines issued by SEBI.
f
11. Full & complete disclosure of all material
facts
Necessity for buy-back
Class of security of buy-back
Amount to be invested
Time limit for completion of buy-back
12. Every Buy Back should be
completed within 12 Months from
the date of passing of the special
resolution
13. From the existing shareholders on proportionate basis through
the Tender Offer.
From Open Market
Stock exchange Book Building Process
From Odd Lot Holders
From securities issued to employees under ESOP
14.
15.
16. On completion of buy-back of shares /
securities, the company shall not make further
issue of the same kind of shares / securities within
a period of 24 months except:
d. Conversion of
c. Stock option
a. Bonus shares; b. Conversion of preference shares
schemes or
or warrants, or or debentures into
sweat equity, or
equity shares
17.
18. Within 30 days of
completion of
Buyback
Buyback of shares
with ROC and SEBI
(for listed co’s.)
20. When a company purchases its own
shares out of free reserves, then a sum
equal to the nominal value of the share so
purchased shall be transferred to the
capital redemption reserve account
referred to in clause (d) of the provision to
sub-section (1) of section 80 and details of
such transfer shall be disclosed in the
balance sheet.
21. No company shall buy its own shares or specified
securities
• a) Through any subsidiary company including its own subsidiary
company.
• b) Through any investment companies or group of investment
companies.
No company shall directly or indirectly purchase its own shares or
other specified securities in case such company has not complied with
the provisions of sections 159, 207 and 211.
22. Special resolution
Buyback should not exceed 25% of the total paid-up
capital and free reserves.
Declaration of Solvency
The shares bought back should be extinguished and
physically destroyed.
No further issue of similar securities within 2
years, except bonus, conversion of warrants, etc.
23. Public announcement in,
• One National English Daily
• One Hindi National Daily
• One Regional Language Daily
Public announcement should specify Record Date
Buyback is not allowed through negotiated deals or
spot transactions or private arrangements.
There is a freedom to fix the price of shares or other
specified securities for buyback.
24. Promoters can sell their shares through tender offer &
also through purchase offer of odd lots.
Merchant bankers will have to be appointed
A copy of the Board resolution authorising the buy
back shall be filed with the SEBI and stock exchanges.
Consideration will be paid in cash
25. Special resolution has to be filed with SEBI & stock
exchanges within 7 days from date of passing the
resolution.
Once the offer is filed with SEBI or Public
announcement is made, Buyback cannot be
withdrawn.
No public announcement is permitted during the
scheme of amalgamation, compromise or
arrangement.
Appointment of Compliance officer & investor service
center.
26. Locked-in or non-transferable shares are not allowed.
Destroying the share certificates in presence of
merchant banker & auditors within 15days.
Buyback through the public offer or tender offer shall
open an Escrow Account.
Advertisement within 2 days of Completion Buyback.
27. a) Effects on the Company:
SHAREHOLDING PATTERN CHANGES
Company: A Ltd
• Total no of shares 150
• Face Value 10
• Equity Capital 1500
• Buyback of equity shares 25
• Max offer price 15
• This can be broadly divided into two parts:
Particulars Pre buy back Post buy back
Promoters 50 50
Non promoters 100 75
SHAREHOLDING PATTERN IN % TERM
Particulars Pre buy back Post buy back
Promoters 33.33 40
Non promoters 66.67 60
28. Particulars Pre buy back Post buy back
Cash 1000 625
Assets 10000 9625
Earnings 1500 1500
Outstanding shares 150 125
Equity shares 1500 1250
Reserves 200 75
Shareholders equity 1700 1325
MP 10 15
FINANCIAL RATIO
ROA 0.15 0.16
ROE 0.88 1.13
EPS 10 12
P/E ratio 1 1.25
29. Tax Benefits
Reduction Higher
in Proportion
investors
interest of shares
Higher Share Price
30.
31. VALUATION OF BUYBACK OF SHARES
Average Closing Price
Inviting Shareholders to sell the share
32. Debt-equity ratio
Track record
Look at ROCE/RONW
Take note of Irrationality
Take a long-term perspective
Dispose off volatile shares
Selling off for profit
36. ABOUT THE COMPANY
1. Beginning Hindustan Vanaspati
Era of FMCG
Manufacturing Company
2. Corporate History Sunlight Soap -1888
-1931
Listed onBrothers India Limited –
Lever Kolkata, Madras & Bombay
Lifebuoy – 1895
3. Listing 1956Lux
-1933
10% equity - Indian Shareholders
Vim….
United Traders Limited
4. Parentage -1935
Part of €40 billion Unilever Group
Hindustan Lever Limited
5. Turnover -1956
Rs.17,523 Cr Audited results for April
6. Employment 1, Hindustan Unilever Limited -2007
2009 to March 3, 2010
>15000 direct employees
37.
38. • Offered price : Rs 280/share
• Maximum buyback of Shares: 2.25 crore
• Maximum Amount : 630 crore
(25% of equity share capital)
• Equity and reserves : 218+2450cr
• Cash and bank balance : Rs 1,976.79cr
• Buyback from BSE & NSE through open market purchase
41. Balance Sheet of HUL Ltd. As on 31-3-2010 (Rupees in crs)
Particulars 31-3-2010 31-3-2011(E)
(A) Sources of Funds
1.Shareholder`s Fund
Capital 218.17 174.536
Reserves & Surplus 2,365.35 1,864.394
2,583.52 2,038.93
2.Loan Funds
(a)Secured Loan
(b)Unsecured Loan
TOTAL OF (A) 2,583.52 2,038.93
(B) Applications of Funds
Net block 2,162.11 2,247.52
capital work-in progress 273.96 273.96
Investment 1,264.08 1,264.08
Deferred Tax 248.82 248.82
Current Assets, Loans and Advances
Inventories 2,179.93 2,179.93
Sundry debtors 678.44 678.44
Cash and bank balances 1,892.21 1,262.21
Other current assets 16.62 16.62
Loans and advances 600.56 600.56
5,367.76 4,737.76
Current Liabilities and Provision -6,733.21 -6,733.21
Net Current Assets -1,365.45 -1,995.45
TOTAL OF (B) 2,583.52 2,038.93
42. DATA 2010 2011 (E) (Rs. in Crs)
(Rs. in Crs)
PAT 2,202.03 2,202.03
Market price of share 239 280
No. of shares 218.17 174.54
Total assets/ Net Worth 2,583.52 2038.93
Assuming PAT to remain same in the year 2010-11
Key Financial Ratio (31st March)
Particulars 2010 2011(E)
Return on assets 0.85 1.08
Return on equity 0.85 1.08
Earning per share 10.09 12.62
Price earning ratio 23.68 22.18
43. • Current Price: Rs.314/share - Implications
Buyback taken place
Date BSE NSE
31 Aug 2010 42921 57079
23 Aug 2010 50060 49940
Total 92981 107019
2,00,000
Editor's Notes
59. Annual return to be made by company having a share capital.(1) Every company having a share capital shall, within 1[ sixty] days from the day on which each of the annual general meetings referred to in section 166 is held, prepare and file with the Registrar a return containing the particulars specified in Part I of Schedule V, as they stood on that day, regarding-(a) its registered office,(b) the register of its members,(c) the register of its debenture holders,(d) its shares and debentures,(e) its indebtedness,1. Subs. by Act 31 of 1965, s. 62 and Sch., for" forty- two" (w. e. f. 15- 10- 1965 ).(f) its members and debenture holders, past and present, and(g) its directors, managing directors, managing agents, secretaries and treasurers, 1[ managers and secretaries], past and present: 2[ Provided that if 3[ any of the five] immediately preceding returns has given as at the date of the annual general meeting with reference to which it was submitted, the full particulars required as to past and present members and the shares held and transferred by them, the return in question may contain only such of the particulars as relate to persons ceasing to be or becoming members since that date and to shares transferred since that date or to changes as compared with that date in the number of shares held by a member. Explanation.- Any reference in this section or in section 160 or 161 or in any other section or in Schedule V to the day on which an annual general meeting is held or to the date of the annual general meeting shall, where the annual general meeting for any year has not been held, be construed as a reference to the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.](2) The said return shall be in the Form set out in Part II of Schedule V or as near thereto as circumstances admit 2[ and where the return is filed even though the annual general meeting has not been held on or before the latest day by which it should have been held in with the return a statement specifying the reasons for not holding the annual general meeting]:(c) the conditions subject to which any manufacturing into stock and given notice of the conversion to the Registrar. the list referred to in paragraph 5 of Part I of Schedule V shall state the amount of stock held by each of the members concerned instead of the shares so converted previously held by him.207. Penalty for failure to distribute dividends within forty- two days. Where a dividend has been declared by a company but has not been paid, or the warrant in respect thereof has not been posted, within 1[ forty- two days] from the date of the declaration, to any shareholder entitled to the payment of the dividend, every director of the company; its managing agent or secretaries and treasurers; and where the managing agent is a firm or body corporate, every partner in the firm and every director of the body corporate; and where the secretaries and treasurers are a firm, every partner in the firm and where they are a body corporate, every director thereof; shall, if he is knowingly a party to the default, be punishable with simple imprisonment for a term which may extend to seven days and shall also be liable to fine: Provided that no offence shall be deemed to have been committed within the meaning of the foregoing provision in the following cases, namely:-(a) where the dividend could not be paid by reason of the operation of any law;1. Ins. by Act 31 of 1988, s. 28 (w. e. f. 15- 6- 1988 ).2. Subs. by Act 65 of 1960, s. 59, for" three months".(b) where a shareholder has given directions to the company regarding the payment of the dividend and those directions cannot be complied with;(c) where there is a dispute regarding the right to receive the dividend;(d) where the dividend has been lawfully adjusted by the company against any sum due to it from the shareholder; or(e) where, for any other reason, the failure to pay the dividend or to post the warrant within the period aforesaid was not due to any default on the part of the company. Payments of interest out of capital.211. Form and contents of balance sheet and profit and loss account. 1[(1) Every balance sheet of a company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall, subject to the provisions of this section, be in the form set out in Part I of Schedule VI, or as near thereto as circumstances admit or in such other form as may be approved by the Central Government either generally or in any particular case; and in preparing the balance sheet due regard shall be had, as far as may be, to the general instructions for preparation of balance sheet under the heading" Notes" at the end of that Part: Provided that nothing contained in this subsection shall apply to any insurance or banking company or any company engaged in the generation or supply of electricity or to any other class of company for which a form of balance sheet has been specified in or under the Act governing such class of company.](2) Every profit and loss account of a company shall give a true and fair view of the profit or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of Part II of Schedule VI, so far as they are applicable thereto: Provided that nothing contained in this sub- section shall apply to any insurance or banking company 2[ or any company engaged in the generation or supply of electricity], or to any other class of company for which a form of profit and loss account has been specified in or under the Act governing such class of company.(3) The Central Government may, by notification in the Official Gazette, exempt any class of companies from compliance with any of the requirements in Schedule VI if, in its opinion, it is necessary to grant the exemption in the I[ public interest]. Any such exemption may be granted either unconditionally or subject to such conditions as may be specified in the notification.(4) The Central Government may, on the application or with the consent of the Board of directors of the company, by order, modify in relation to that company any of the requirements of this Act as to the matters to be stated in the company' s balance sheet or profit and loss account for the purpose of adapting them to the circumstances of the company.(5) The balance sheet and the profit and loss account of a com- pany shall not be treated as not disclosing a true and fair view of the1. Subs. by Act 65 of 1960, s. 62, for sub- section (1).2. Ins. by s. 62, ibid.3. Subs. by s. 62 ibid. for" national interest"state of affairs of the company, merely by reason of the fact that they do not disclose-(i) in the case of an insurance company, any matters which are not required to be disclosed by the Insurance Act, 1938 ; (4 of 1838 .)(ii) in the case of a banking company, any matters which are not required to be disclosed by the Banking Companies Act, 1949 ; (10 of 1994 )(iii) in the case of a company engaged in the generation or supply of electricity, any matters which are not required to be disclosed by 1[ both the Indian Electricity Act, 1910 , (9 of 1910 ) and the Electricity (Supply) Act, 1948 ]; (54 of 1948 .)(iv) in the case of a company governed by any other special Act for the time being in force, any matters which are not required to be disclosed by that special Act; or(v) in the case of any company, any matters which are not required to be disclosed by virtue of the provisions con- tained in Schedule VI or by virtue of a notification issued under sub- section (3) or an order issued under, subsection (4).(6) For the purposes of this section, except where the context otherwise requires, any reference to a balance sheet or profit and loss account shall include any notes thereon or documents annexed thereto, giving information required by this Act, and allowed by this Act to be given in the form of such notes or documents.(7) If any such person as is referred to in sub- section (6) of section 209 fails to take all reasonable steps to secure compliance by the company, as respects any accounts laid before the company in general meeting, with the provisions of this section and with the other requirements of this Act as to the matters to be stated in the accounts, he shall, in respect of each offence, be punishable with imprisonment for a term which may I extend to six months, or with fine which may extend to one thousand rupees, or with both: Provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove 2[ that a competent and reliable person was charged with the duty of seeing that the provisions of this section and the other requirements1. Subs. by Act 65 of 1960; s. 62, for" the Electricity (Supply) Act, 1948 (54 of 1948 )".2. The words" that he had reasonable ground to believe and did believe" omitted by S. 62, ibid.aforesaid were complied with and was in a position to discharge that duty: Provided further that no person shall be sentenced to imprison- ment for any such offence unless it was committed wilfully.(8) If any person, not being a person referred to in sub- section (6) of section 209, having been charged by the managing agent, secretaries and treasurers, 1[ managing director or manager,] or Board of directors, as the case may be, with the duty of seeing that the provisions of this section and the other requirements aforesaid are complied with, makes default in doing so, he shall, in respect of each offence, be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees, or with both: Provided that no person shall be sentenced to imprisonment for any such offence un
BuybackOf SharesChapter 13Recommendations & FindingsWhat should you look at before participating in buybacks?Ever since the buyback of shares was allowed in India, there has beena lot of confusion among shareholders; as whether to sell-off theirstake in the company or to retain it. To opt for a particular option is notas easy as it appears. The perception of the shareholders about thefuture of the company is the most important factor that influencestheir decision.However, that decision may not be accurate since they might not havecomplete access to the internal and external strategies of thecompany. A lot of careful thought has to be given before a finaldecision is taken. Here’s a way on how to go about it.Debt-equity ratio is an important criterion. The companieshaving high debt burden are unlikely to have free cash. They shouldprefer redeeming their debt first, to buying back equity. MNCshaving subsidiaries in India are unlikely to have any motive ofrigging up the share price and their buyback offer is likely to begenuine.Track record of raising capital in the past. Companies thathave frequented the capital markets to raise money are unlikely tobe good candidates for buyback.BuybackOf SharesLook at ROCE/RONW-The companies with consistently highROCE/RONW are more likely to have free cash than others.Checkout the previous price pattern of the shareCompanies generally tend to buyback shares at a higher premiumover the market price if they feel that their shares are under-priced.This decision to buyback often leads to an increase in share price.At this stage, you have to analyse the fluctuation in the price of thescrip for a specific time period (say one year) and if you find thatthe scrip moved a band lower than the offer price, selling of thescrip would be a better option.Take note of Irrationality A buyback offer with a hugepremium may appear very attractive. Investigate and ensure thatany temporary negatives do not affect the share price. If you feelthat the share prices of the company are presently undervalued,refrain from selling, since a company buying back its shares isindirectly conveying that its shares are undervalued.Take a long-term perspective It would be difficult toenvisage whether a company would issue bonus or split shares ormake an acquisition. But these factors can be sidelined if thefundamentals of the company are strong and you expect thecompany to perform well in the future. Therefore, in the long-termperspective, the scripts of such companies should not be sold.Dispose off volatile shares Despite strong fundamentals,the shares of a few companies are highly volatile and exhibit wildoscillation in prices. If you want to play it safe and avoid volatility,selling out would be a better option.BuybackOf SharesSelling off for profit The first question that comes to mindonce you decide to sell your scrip is whether to opt for a buyback orto sell it in the market. Even after buyback is announced, thepurchase price need not necessarily be the highest if a price band isgiven. Further, there is no guarantee that all the shares offered forbuyback would be bought. Companies mostly buy about 10% of theequity in buybacks. In such cases it would be wiser to sell yourstake in the market at a time when prices of your scrip are trading at a price equivalent to the highest in the offer band.Finally, one should keep one thing in mind, that buyback has no impacton the fundamentals of the company or on the economy. The onlything is that one should be cautious of unscrupulous promoters' trapsand do not fall prey to them.The provision to allow buyback can be a booty for long-term investorswho want to stick on in good companies, but it can be a terrible bait inmany others