Document background
The Stock Buyback Agreement is a crucial document used when an Indian company decides to repurchase its own shares from existing shareholders, typically to improve financial ratios, return excess cash to shareholders, or optimize capital structure. This document is essential for ensuring compliance with Section 68 of the Companies Act, 2013, and SEBI regulations (for listed companies). It becomes particularly relevant when companies have accumulated substantial cash reserves, want to increase promoter holding, or aim to support share price. The agreement must carefully navigate Indian regulatory requirements, including maintaining post-buyback debt-equity ratios, following prescribed pricing methods, and adhering to specific procedural timelines. It serves as the primary legal framework documenting the buyback terms, shareholder rights, compliance requirements, and execution process.
