The board of Infosys, India’s second largest software services firm, will meet on August 19 to consider up to Rs 13,000-crore share buyback proposal.
The share buyback -- which will be the first in the company’s 36-year history -- has been a long standing demand by some of the founders and high-profile former executives, who have been pushing Infosys to return surplus capital to its shareholders.
Bowing to the demand, the Bengaluru-based company had in April announced that it will pay up to Rs 13,000 crore to shareholders during the current financial year through dividend and/or share buyback.
The IT firm had recently adopted a new Articles of Association that included a provision for buyback.
“...The Board of Directors of Infosys ltd will consider a proposal for buyback of equity shares of the company at its meeting to be held on August 19, 2017,” Infosys said in a regulatory filing late last night.
It added that the outcome of the board meeting will be disseminated to the stock exchanges after the conclusion of the meeting.
The company, however, did not outline the details of the proposed share buyback in the regulatory intimation.
Reacting to the announcement, shares of Infosys were trading higher than yesterday and closed at Rs 1,021.15 apiece, up 4.54 per cent.
Infosys said the trading window has been closed with immediate effect and will re-open on August 22, 2017.
Share buybacks typically improve earnings per share and return surplus cash to shareholders, while also supporting share price during period of sluggish market condition.
Infosys had cash and cash equivalents worth over $3.5 billion on its books as of June 30, 2017.
Infosys, during the company’s 36th AGM in June, had said it was in the process of finalising a suitable “distribution mechanism” for its Rs 13,000-crore capital allocation plan.
“As the company has a large shareholder base and is listed in multiple countries, the manner of distribution to shareholders requires compliance under laws of several jurisdictions,” Infosys Chairman R Seshasayee had said.
In the regulatory filing, Infosys said if the buyback is approved, an offer will be made after a tender offer statement is filed with the US Securities and Exchange Commission.
A number of tech companies have announced share buyback programmes this year to offer rich returns to shareholders.