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Concept
Exit mechanism
Shareholder value management
premium Completion of bay back in 12 months From existing shareholder, from employees and directors out of ESOPs and Sweat equity
within six months Two buy back programmes separated by 365 days period Only direct company can purchase.
Procedure:
Kept open for not less than 15 days and more
than 30 days Offer accepted in proportionate basis Verification by company within 15 days Open special bank account Make payment by 7 days
1998), provisions of listing agreement. Appoint merchant banker mandatory No price mechanism
Methods:
Fixed price tender offer Book-building method Open market purchase
market price Lower the p/e, higher the company can pay Price should not be lower than issue price If company doesnt have too long history of listing it is better to work out IRR.
Quantum of buyback:
Buy back in value terms of shares shall not
exceed 25% of total paid up capital and free reserves Buy back of equity shares shall not exceed 25% of paid up capital. Debt equity ratio shall not exceed 2:1 after buyback.
DELISTING OF A LISTED COMPANY: ConceptDelisting is a process by which a company whose shares are listed on the stock exchange is taken private once again by getting its publicly held shares bought over by private shareholder and terminating the listing agreement with the stock exchange.
De-listing: Either compulsory or voluntary Reasons Stock exchange penalizes company Non payment of listing fees Violation of listing agreement Statutory violation as non filing of accounts
De-listing in India:
De-listing related with strategical, financial and
investment banking consideration. If Cost of remaining listed outweighs the benefit sought to be received then de-listing is valid decision. Private equity considered better in terms of returns.
of
which shareholding fall below limit required Compulsory de-listing by stock exchanges Consolidation of holding by a person in a manner in which public holding falls below requirement
in such a way that the public shareholding falls below the minimum limit required. An open offer made by an acquirer pursuant to Takeover code due to which public shareholding falls below required limit.
Voluntary De-listing:
Listed at least 3 years prior to date of delisting Obtain approval from shareholder in general
meeting Merchant banker should be appointed to administer the buy-back for de-listing.
Process requirement:
Announcement
for de-listing contain information of floor price, trading center, trading process, stock exchanges. Promoter opens escrow account and deposit 100% of the amount required Bids put by on line electronic systems through trading members Bidding period last for 3 days.
Conditions If any convertibles outstanding, de-listing not permitted Delisting need not be given where securities continues to be listed in NSE and BSE.
Re-listing