BUY BACK OF SECURITIES

Objectives To increase promoters holding Increase earning per share Rationalise the capit al structure by writing off capital not represented by available assets. Suppor t share value To thwart takeover bid To pay surplus cash not required by busin ess To service equity more efficiently

Conditions Authorised by the Articles of association of the Company. By Board resolution n ot exceeding 10% of the paid up capital and free reserves. By special resolutio n at General Meeting not exceeding 25% of paid up capital and free reserves. Bu y back of equity not to exceed 25% of the total paid up capital & free reserves in the financial year. Not to exceed in any financial year 25% of the total equ ity paid up capital of the company.

The ratio of the debt owed by the company is not more than twice the capital and its free reserves after such buy-back. Notice containing special resolution to have explanatory statement stating : o o o o o Disclosure on all material facts Necessity for buy back Amount to be invested un der buy back Time limit for completion of buy back Class of security intended fo r buy back

There has been no default in : o o o o o Repayment of deposits or interest thereon Redemption of debentures/preference sh ares Payment of dividend Repayment of term loan or interest thereon Filing of An nual Returns, Annual Account etc.

Shares or other specified securities for buy back are fully paid up. Buy back of listed securities to be in accordance with SEBI regulations.

Resources of Buy Back Free reserves. An amount equal to nominal value of shares so purchased shall be transferred to CRR. Securities premium account. Proceeds of issue of any shares or securities.

Modes of Buy Back Existing security-holders on a proportionate basis. The open market through (i) book building process; (ii) stock exchanges. Odd lots.

Purchasing the securities issued to employees of the company pursuant to a schem e of stock option or sweat equity

Securities not available for Buy Back Securities in lock in period Non-transferable securities

Disputed securities kept in abeyance

Declaration of solvency

After the passing of resolution but before making buyback, file with the Registr ar and the SEBI a declaration of solvency. Declaration must be verified by an af fidavit to the effect that the Board has made a full inquiry into the affairs of the company. That company is capable of meeting its liabilities and will not be rendered insolvent within a period of one year of the date of declaration adopt ed by the Board. Signed by at least two directors of the company, one of whom sh all be the managing director, if any.

Issue of further shares Every buy back shall be competed within 12 months of Board / special resolution. No issue of same kind of securities, in any manner, upto 6 months of completion of buy back.

Register of securities bought back After completion of buy back, company shall maintain register of securities boug ht back with following :

Consideration paid for securities bought back; Date of cancellation of securitie s; Date of extinguishing and physically destroying of securities; and Such other particulars as may be prescribed. Where a company buy back its securities, it must extinguish and physically destr oy such securities within 7 days of the last date of completion of buy back.

Prohibition A company shall not directly or indirectly purchase its own securities : Throug h any subsidiary company including its own subsidiary companies; or Through any investment company or group of investment companies. Filing of return A company shall after completion of buy back, file with registrar and SEBI a ret urn containing particulars of such buy back within 30 days of completion of such buy back.

Procedure for buy back

After passing of board/special resolution, make a public announcement in at leas t one English National, one Hindi National and Regional Language Daily. Announce ment shall specify a date, which shall be "specified date" for the purpose of de termining the names of shareholders to whom the letter of offer has to be sent. Public notice shall be given containing disclosures as specified in Schedule I o f the SEBI regulations.

Draft letter of offer shall be filed with SEBI through a merchant Banker. The le tter of offer shall then be dispatched to the members of the company. Copy of th e Board resolution authorising the buy back shall be filed with the SEBI and sto ck exchanges. Date of opening of the offer shall not be earlier than 7 days or l ater than 30 days after the specified date. Offer shall remain open for a period of not less than 15 days and not more than 30 days.

Escrow Account The company should deposit in an Escrow account opened with a scheduled bank on or before opening of offer an amount : o Where estimated consideration payable does not exceed Rs.100 crores, 25% of cons ideration payable; Where consideration payable exceeds Rs.100 crores, 25% upto R s.100 crores and 10% of the balance. o

Payment of consideration Payment for buy back to be made within 7 days from date of completion of verific ation of offers. Verification of offers to be done within 15 days of closure of offer. Payment to be made to those security holders whose offers have not been r ejected in full or in part. After completion of verification, within 7 days secu rities to be returned to security holders whose offers have been rejected.

Public advertisement-post buyback Within 2 days of completion of buy back, public advertisement to be issued conta ining : o o o o o Number of securities bought back Buy back price Total amount invested in buy bac k Details of security holders from whom securities exceeding 1% were bought back Consequent changes in capital structure and share holding.

Buy back through Stock Exchange Max. Price at which buy back shall be made shall be specified. Only through stoc k exchanges having electronic trading facility. The company is shown as the purc haser on the electronic screen. Appointment of merchant banker. Public announcem ent at least 7 days prior to commencement of buy back. Copy of such public annou ncement to be filed with SEBI within 2 days of announcement.

Only at stock exchanges having nation wide trading terminals. Company & Merchant banker to furnish information, to SEBI, of securities bough back on daily basis . Publish such information on fortnightly basis in a national daily. Publish inf ormation every time when additional 5% buy back is completed. No letter of offer required. Company to purchase all securities offered by holder without attachin g any condition.

If seller has attached any condition, such securities should not be bought back. Promoters/persons in control not allowed to sell. Company not under an obligati on to place buy orders on daily basis. Company should pay to brokers on every se ttlement date.