BUY-BACK OF SHARES AND SECURITIES

Abstract

A buyback, also known as a share, repurchase or stock buyback, refers to the process through which a company repurchases its own shares or securities from the market, thereby reducing the number of outstanding shares. The concept of buy-backs of shares and securities holds significant importance, representing a strategic maneuver employed by companies to manage their capital structure, optimize shareholder value, and respond to changing market dynamics. The motivations behind share buy-backs are multifaceted and can vary depending on the company's strategic objectives and prevailing market conditions. One primary rationale is to return surplus cash to shareholders in a tax-efficient manner, providing them with an alternative form of capital distribution alongside dividends. Moreover, buy-backs can also serve as a defensive tactic against hostile takeovers or activist investors seeking to gain control of the company. while buy-backs offer various strategic benefits, they are not without controversy and regulatory scrutiny. Critics argue that buy-backs can be misused to artificially inflate stock prices, manipulate earnings per share metrics, and provide short-term boosts to executive compensation tied to share performance.