A

PRESENTATION ON

BUY BACK OF SHARES

REGARDING TO RELIANCE ENERGY

SUBMITTED TO :-
PARIZAD DUNGORE
(FACULTY – S. ANALYSIS)

SUBMITTED BY:-
NIKHIL GIRHEPUNJE
8NBNG147
ICFAI NATIONAL COLLEGE
Buyback is reverse of issue of shares by a company where it
offers to take back its shares owned by the investors at a
specified price.

Valuation Of Buy back:-

Average Closing Price:-
Weighted Average for Volume

Invitation To Shareholder:-
To invite shareholder to sell
some or all of their shares within a set price range.
1.Low Price Range 2.Top Price Range
How is it Done:-
Tender Offer :-
Shareholder have an option to submit a
portion OR to submit all shares.
Dutch Auction :-
Companies state a range of price at which
it’s willing to accept & buy.
Company can buy a share from a Open market

Book Building Process

Why Companies Go For Buy Back :-
Increase Promoters Stake
Unused Cash
Tax Gain
Market Perception
Exit Option
Escape monitoring of accounts and legal
controls
Show rosier financials
Restriction’s On Buyback:-
A special resolution has to be passed in general
meeting of the shareholders.

Buyback should not exceed 25% of the total paid-up

capital and free reserves.

A declaration of solvency has to be filed with SEBI

and Registrar Of Companies.

The shares bought back should be extinguished and

physically destroyed.

The company should not make any further issue of

securities within 2 years, except bonus, conversion of
warrants, etc.
Effect of Buy Back on Stock Exchange :-
Abnormal increase In Share Price
Reduction In Investors Interest

Penalty:-
Company or Any Officer Who At The Default:-
Punishable with Imprisonment May Extend To
2 Year’s.
May Be Rs.50,000.
Or Both Of Above.
 Buy Back Of Reliance Energy:-
Mr. Anil Ambani (Reliance Energy) bought back 6,50,000
equity shares of the company in the morning on Tuesday
at nearly Rs.1,279.23/share aggregating Rs.831.5 million.
Amounting 10 % the company`s equity and free
reserves.
Reason:- To increase the price of its shares.
Result:- At noon Friday, shares of the company were
trading at Rs.1,310 up by Rs.28.20 from its previous close
at the BSE.
 Act For Buy Back Of Shares:-
Section 77A, 77AA and 77B of the Companies
Act,1956.

Conclusion :-
The buyback has slight impact on the fundamentals
of the economy or the company.
Therefore investors should be cautious of
promoters' traps.