Group17 project fm
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Transcript of Group17 project fm
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Buyback of Stocks
Submitted By Ishani Chakraborty 141224
Parag Chaubey 141233Sushil Agarwalla 141260
(Group No. 17)
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IntroductionThe process of repurchasing outstanding
shares by a company in order to reduce the number of shares on the market is known as buyback.
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Ways of RepurchasingOpen Market Purchase Tender Offer Targeted Purchase.
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Open MarketCompany buys their shares as in the regular
share markets.
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Tender OffersHere the firm announces to all of its
stakeholders that it is willing to buy a fixed number of shares.
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Targeted PurchaseWhen firm purchases from specific individual
stockholder.
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Reasons to choose RepurchaseFlexibility Executive CompensationOffset to DilutionUndervaluationTaxes
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Pros & ConsProsIncreased Shareholder Value Higher Stock Prices Increased Float Excess Cash Income Taxes Price Support
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ConsManipulation of Earnings Execution of BuybackHigh Stock Prices
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Present Scenario in India
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Present Scenario in IndiaDuring the 1990s, buyback increased
dramatically and in 1999, cash returned in buybacks overtook cash paid out in dividends, in the aggregate.
The Finance Act, 2013 introduced a withholding tax on buyback of shares (not being shares listed on a recognised stock exchange) much like dividend distribution tax
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