Process of Buyback
1. Authorization: The maximum number of shares to be repurchased and the window of time during which these repurchases shall take place are decided by the board of directors, who also approve the buyback program.
2. Announcement: The company notifies the public about the buyback program, describing its objectives, the maximum number of shares that will be acquired, and the anticipated completion date. This guarantees openness and communicates the company’s goals to the market and shareholders.
3. Involvement of Intermediaries: It is possible to get guidance from financial intermediaries regarding the quantity and schedule of repurchase transactions. These intermediaries assist the business in navigating the marketplace and carrying out buyback deals successfully.
4. Market Monitoring: To find appropriate chances for share repurchases, the company keeps an eye on the state of the market, including factors like transaction volumes and price patterns. This helps in maximizing the buyback transactions’ timeliness.
5. Execution of Transactions: In response to opportunities they see, intermediaries can conduct buyback transactions on the open market or engage in private negotiations with shareholders. This means acquiring shares in accordance with the guidelines specified in the buyback scheme.
6. Compliance and Reporting: By legal obligations and disclosure obligations, the company updates shareholders on a regular basis during the buyback process. This guarantees accountability to stakeholders and openness.
7. Finalization: The public is informed by an announcement made when the buyback program comes to an end. This statement details if authorized shares have been repurchased or if the program’s expiration date has passed.
8. Effect on Financial Statements: The number of outstanding shares decreases when repurchased shares are recorded as treasury stock. Since the updated number of outstanding shares is used to compute financial metrics like earnings per share (EPS) and return on equity (ROE), this influences such metrics.