In December 2007, I wrote about a stock buyback announcement made by Mastek (MAST@IN). See “The Mystery Behind Mastek’s Buyback.“
In that post, I had written:
“Why did the company give a maximum price of Rs 750 per share for its buyback, even though the current market price is Rs 280 per share? Indeed, adjusted for stock splits and bonus issues, this company has not seen its stock price hit Rs 750 in the last seven years.”
That post attracted many comments
some of which dealt with the possible gimmickry in buyback announcements when buybacks are to be conducted thru open market purchases.
Fast forward to today when 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:
1. 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
2. not to close the buyback without completing it except under exceptional circumstances, with prior approval of SEBI.
That will put a stop to some of the gimmickry.
Good work SEBI.