SEBI makes Mastek change Buyback norms
From Fundoo Professor:
Mastek published an important notice in The Financial Express (page 11, New Delhi edition dated may 16, 2008). The company disclosed that SEBI has directed it to:
- place orders for buying back shares from the market “at least once a week at market related prices during the periods when the market price is lower than the maximum buy-back price such that the amount of buy-back is exhausted expeditiously”; and
- not to close the buyback without completing it except under exceptional circumstances, with prior approval of SEBI.
In the Corrigendum to Public Announcement, Mastek has also said that:
“The Company does not intend to close the Buy-back before the maximum limit for the Buy-back is reached except in case of circumstances detrimental to the interest of the Company or the Buy-back such as adverse unforeseen circumstances, the market price being above the maximum price for a sustained period of time, political and other uncertainties and occurrence of any force majeure events, in which events the Company may close the Buy-back with the approval of SEBI.”
Uhem. This is a weasel clause. But since SEBI approval is needed, it makes things a lot better.
The other clause - where they should place orders at least once a week is also good for investors. The buyback price of Rs. 750 maximum is WAY above current prices (though the stock has shot up 25% since the announcement)
Other such transactions in the pipeline are Sasken’s buyback (max price 180 I think), SRF (max price 160) and a few others. It will be interesting to see how shares perform in buybacks.