What is the purchase of shares?
The purchase of shares is a situation where the company decides to purchase all or part of its outstanding shares. This activity, also known as a return purchase of shares or purchase of shares, allows the company to control the number of shares provided to investors. There are two main reasons why the company would decide to buy back outstanding stocks, one of which is to deal with the solution to takeover and the other aimed at increasing the price for the remaining stocks available for purchase.
When attempting to discourage the company's Raider attempts to get control of the company, one of the first moves is to prevent Raider from gaining as many shares as possible. If you want to start a strategy, the company buys all shares that are currently available in the open market. The second step may be the approximation of current investors and offer the purchase of their shares, sometimes with higher than the current market value. Assuming that the main shareholders are willing to build it with the company and do not allow theAcceptance, a back -back strategy will end the raid effectively and allow the company to continue operation.
There are situations where the company believes that its shares are not sold at an affordable price level. In order to increase the price of the shares, the company will decide to purchase a part of the outstanding shares. This application strategy application requires a shares to determine how many shares can be available for investors, and generates sufficient interest to increase the purchase price. As a by -product of this increased price per share, earnings generated for existing investors will also increase.
The concept of repurchase of shares is common in most countries around the world. It is not uncommon for regulatory agencies to create and enforce the limits of how this type of purchase can be made. In some cases, the submission of the repayment of the necessary RTS with the agency and receiving consent to the purchase. Other countries simply set a limit to the number of outstandingCH shares that the company can buy in a given period of time.
The idea of these regulations is often related to maintaining the stability of markets where shares are traded. While the repurchase of the shares carried out by a relatively small enterprise is unlikely to cause any main market problems, a repurchase carried out by a multinational company could put the market in the clutter for at least a short time. By adopting steps to protect market stability, the regulatory agencies thus protect the best interests of all investors who actively trade on this market.