Buy-Back is a corporate transaction in which a company repurchases its shares from the existing shareholders, whereby the number of shares outstanding in the share capital reduces.
The objective for buy-back may be varied viz., enhancing the Earning Per Share (EPS), increase the promoters’ holding, improving the company’s Price Earning Ratio and Return on Networth, Return on Assets, reducing the float of shares in the market, write-off capital which is not supported by assets or providing an exit option to the investors.
Investors who are looking for an exit and expecting immediate gains prefer a buy-back of shares. A buy-back offer is an option for the shareholders to accept the offer and not a compulsory mandate. There is no tax burden on shareholders on the capital gain as the company pays tax on the distributed income [consideration paid by the company on shares offered in buy-back minus the amount received by the company on the issue of shares].
We, at SimplyBiz, offer comprehensive advisory and compliance support under the Companies Act, 2013, Foreign Exchange Management Act (FEMA), and Income Tax Act for buy-back transactions. Our assignment encompasses understanding the objective, advising on the eligibility criteria and audit requirements, arriving at the extent of shares that can be bought back, available sources of buyback, pre-requisite actions and compliances under the Companies Act and FEMA.
We have handled several buy-back assignments for unlisted companies from various sectors including the Packaging industry, Information Technology, Non-Banking Finance Companies (NBFC) etc.,
Please reach us at email@example.com with your requirements and we shall be happy to help.