National Securities Depository Limited · BSE:NSDL
National Securities Depository — Investor Presentation (August 2021)
32 slides from National Securities Depository's investor presentation, August 2021
Slide 1: Buyback of Securities and Open Offer of Shares
Buyback of Securities and Open Offer of Shares
Slide 2: Disclaimer
Disclaimer 2 Information contained in this presentation is as on August 31, 2021. This presentation may be used with the permission of SEBI and only for non-profit awareness programs, This presentation is only for Educational and Awareness Programs and not for any legal interpretations.
Slide 3: Buyback of Securities
Buyback of Securities
Slide 4: Flow of Presentation
Flow of Presentation 4 1. What is Buyback of Securities 2. Methods of Buyback of Securities 3. Common reasons for Buy-back 4. How to apply in a Buyback 5. Points to ponder before participating in Buyback
Slide 5: What is Buyback of Securities
What is Buyback of Securities 5 The Corporate action where a company repurchases its own shares from its existing shareholders Buyback : Opposite of public issue of shares In a public issue, company sells its shares in the stock market In a Buyback, company offers to buy shares from the invest
Slide 6: Common reasons for Buy-back
Common reasons for Buy-back 6 To return surplus cash to shareholders Issue of shares Improve return on equity shares through distribution of cash Improve earnings per share (EPS) by reduction of shares (buy-back reduce the total number of Company Shareholders shares of the company) Sharehold
Slide 7: Conditions for Buy-back
Conditions for Buy-back 7 Maximum Buy- back Limit • <= 25% of (Paid-up capital + Free Reserves) Debt to Equity Ratio* • < 2:1 Approved by • Board Resolution would suffice if Buy-back <= Special/ Board 10% of (Paid up capital + Free Reserves) Resolution • Special Resolution required, if more than 10%
Slide 8: Methods of Buyback
Methods of Buyback 8 Buyback Open Market Tender offer (Stock Odd lot exchange Buyback Mechanism) Tender offer : Shareholders can tender their shares on a proportionate basis Odd Lot Buyback : Provisions of buy-back through tender offer shall be applicable Open Market: Shareholder can sell shar
Slide 9: Buy Back - Tender offer
Buy Back - Tender offer 9 Reservation for small shareholders: 15% of the no. of securities proposed to buy back or no. of securities entitled as per their shareholding, whichever is higher Public Announcement (PA) within 2 working days of special resolution or Board resolution. Record date for
Slide 10: Methods of Buyback (Comparison)
Methods of Buyback (Comparison) 10 For Buyback, a public announcement made by Company TENDER ROUTE OPEN MARKET ROUTE Limit on Buyback Size Up to 25% of Net Worth Up to 15% of Net Worth Multiple pricing subject to cap Pricing Fixed Price of maximum offer price Shareholders Participation Only Record D
Slide 11: Offer Price & Record Date
Offer Price & Record Date 11 Price at which: TENDER OPEN Offer Shares will be bought back by MARKET OFFER Price the Company Offer price determined by the Multiple pricing Board of the Company Fixed Price subject to cap of maximum offer price When is it beneficial for shareholders to tender their
Slide 12: Tender Route - How to Apply?
Tender Route - How to Apply? 12 THIRD PARTY REGISTERED BROKER/ SHAREHOLDER’s BROKER * COMPANY’s BROKER Participate through Brokers APP/ Participate through stock broker and Website make a bid by using quick unique client code (“UCC”) facility Indicate buyback bid to the broker who will in turn place
Slide 13: Tender Route – Trade & Settlement
Tender Route – Trade & Settlement 13 Shareholder to approach the Broker to participate in Transfer the tendered Broker to bid using Buyback shares to special A/C the acquisition window of Clearing of the stock exchange (provide details of Corporation number of shares to be tendered) Buyback Closure
Slide 14: Open Market Route – How to Apply?
Open Market Route – How to Apply? 14 DEMAT SHAREHOLDING PHYSICAL SHAREHOLDING SNAPSHOT OF OPEN MARKET TRADE Shareholder Company Tendering can be done only after T Day T Day shares are Places Places “Buy” dematerialized and “Trade” order T+1 T+2 hence physical Shares Shares shareholders to SELLER CLE
Slide 15: Points to ponder before participating in Buyback
Points to ponder before participating in Buyback 15 Participation in Buyback is voluntary Shareholders holding shares as on Record Date shall only be eligible to tender their shares in the Buyback. Decide to participate if one feels that the share price in the market is overvalued or you don’t
Slide 16: Open Offer of Shares
16 Open Offer of Shares
Slide 17: Flow of Presentation
Flow of Presentation 17 1.What is Open Offer of Shares 2. Methods of Open Offer of Shares 3. Why Open Offer is mandated 4. How to apply in an Open Offer 5. Points to ponder before participating in Open Offer
Slide 18: What is an Open Offer?
What is an Open Offer? 18 What is an Open Offer? An Offer given by an Acquirer to the shareholders of a company to buy their shares at a fixed price. When is the Offer made? Mandatory Offer – When the shareholding of Acquirer increases beyond the prescribed limit or in case of change in control of c
Slide 19: Why Open Offer is mandated
Why Open Offer is mandated 19 Any substantial acquisition of shares results in change in ownership Change in ownership of company may result following changes: Company management Business profile Company Strategy Business plans Hence, to give fair exit to investor in case they don’t ag
Slide 20: Acquisition
Acquisition 20 means Directly OR Indirectly OR Agreeing to Acquiring Acquire Shares OR Voting Rights OR Control Target Company
Slide 21: Offer Size
Offer Size 21 Number of shares to be acquired from public: In Mandatory Open Offers: Minimum 26% of the share capital If post offer holding >maximum permissible non public shareholding (MPNPS), acquirers to undertake to bring it back within 1 year. In voluntary offers by shareholders holding more
Slide 22: Mandatory and Voluntary Open Offer
Mandatory and Voluntary Open Offer 22 Mandatory Open Offer Acquirer Target Company Public Shareholders Owns > Acquires >5% in FY 25%<75% Owns < 25% Exceeds 25% stake No control Acquires control Mandatory Open Offer > 26% Voluntary Open Offer Owns > 25%<75% Existing Target Company Public Shareholders
Slide 23: Activities and Timeline
Activities and Timeline 23 Date of Public Announcement (PA) for open offer To be published on the date of trigger Detailed Public Statement (DPS) To be published within 5 working days of PA Dispatch of Letter of Offer to the Letter of offer issued by acquirer containing shareholders details of open
Slide 24: How Offer Price is Arrived at
How Offer Price is Arrived at 24 Offer Price Offer Price is the price at which shares will be bought from the shareholders by the Acquirer Frequently traded shares* Infrequently traded shares The highest of: Determined by the Acquirer and the (i) Highest price paid by Acquirer / Person acting in c
Slide 25: Methods of Tendering shares
Methods of Tendering shares 25 Open offer Off-market Stock transfer exchange Mechanism
Slide 26: Offer Route – Off-market
Offer Route – Off-market 26 Shareholder to make off- market transfer of shares Shareholder to send Shareholder holding to Escrow Open offer Form of Acceptance-cum- physical shares shall send Demat account (account Acknowledgment to Original certificates, duly details given in Letter of collection ce
Slide 27: Offer Route – Stock Exchange Mechanism
Offer Route – Stock Exchange Mechanism In case of dematerialized shares 27 Shareholder to approach the Broker to participate in Open Transfer the tendered Broker to bid using the Offer * shares to special A/C acquisition window of of Clearing the stock exchange & (provide details of Corporation gene
Slide 28: Offer Route – Stock Exchange Mechanism
Offer Route – Stock Exchange Mechanism In case of Physical shares 28 For shareholders holding physical shares - Post placement of bid by broker, following documents along with Transaction Registration Slip (TRS) shall be submitted to the Registrar and share transfer agent (RTA) Original share ce
Slide 29: Withdrawal of Open Offer
Withdrawal of Open Offer 29 Statutory Approvals required have been refused. Acquirer, being natural person, has died. Any condition in the agreement is not met for reasons outside the reasonable control of the acquirer Circumstances as in the opinion of the SEBI, merit withdrawal
Slide 30: Points to ponder before participating in Open offer
Points to ponder before participating in Open offer 30 Participation in open offer is voluntary. Read disclosures made by acquirer in the public announcement. Read recommendations of independent directors of the company published in the newspapers before deciding to participate in the open off
Slide 31: Additional Information
Additional Information 31 For further information you may visit the following websites: w w w. s e b i . g o v. i n w w w. i n v e s t o r. s e b i . g o v. i n For grievance redressal you may visit: w w w. s c o r e s . g o v. i n Or you may call at SEBI Toll Free Helpline Numbers betwe
Slide 32: THANK YOU
THANK YOU
National Securities Depository — Investor Presentation (August 2021) on 6ix