Share Buybacks
A share buyback is a corporate action undertaken by a company to repurchase its own existing shares from current shareholders or a purchase by a subsidiary of shares in its holding company. Such a transaction is approved by shareholders through a resolution at a general meeting subject to provisions of section 5.99-5.121 of the ZSE Listings Rules, the articles of association of such company and sections 78 – 84 of the Companies Act, Chapter 24:03. One can think of a share buyback as a company investing in itself by using its cash to buy its own shares. Companies undertake share repurchases either to increase the value of shares, or to eliminate any threats by shareholders who may be looking for a controlling stake.
The company will either retire the repurchased shares or keep them as treasury stock (available for re-issuance). A company can repurchase its shares directly from the open market at the market price, or offer its shareholders the option to tender a part or all of their shares directly to the company, within a certain time frame at a fixed price
In terms of the Zimbabwe Stock Exchange Listing Rules:
A share buyback must be authorised either through a specific approval or a general approval by shareholders by way of a resolution at a general meeting. This should be in terms of the company’s articles of association
Any general repurchase need not exceed 20 percent of the company’s issued share capital of that class in any one financial year
Companies may only undertake a repurchase of securities if, after such repurchase, it still complies with shareholder spread requirements
The company or its subsidiary may not repurchase securities if the company is under cautionary announcement or during closed periods
An independent professional expert acceptable to the ZSE must provide a fair and reasonable opinion if the shares will be repurchased at a premium to the current market price.