Corporate Actions : Buyback , Market Purchase or Sell

Here is a link to an article on exiting investors being unhappy over their shares not fetching maximum buyback price in an open offer.

I wonder if SEBI is really doing away with open offer purchases. Isn’t it only benefiting the exiting shareholders? Buybacks aren’t only to reward the exiting shareholders. When a company’s share prices are for some temporary reason, a company can increase the value of ownership of continuing shareholders by buying the shares from the open market at discounted prices. This increases the ownership of the continuing shareholders in the company. Buyback tax and removal of open offers removes this option from the table for creating value for the shareholders who choose to remain shareholders of the company or maintain their ownership in the company.

Buyback tax should be applicable only on Tender offers as they are most often used for “rewarding” exiting shareholders at the expense of continuing shareholders. Also perhaps a restriction could be added on open market purchases where it’s only allowed if the shares are trading at say a 52 week low.