The stock market manager suggests companies buy back their shares
(Independent) .. In order to strengthen the functions of the stock market and enhance the confidence of investors, the Executive Director of the Iraqi market for securities Taha Ahmed Abdul Salam, to start joint stock companies to buy a proportion of their shares to promote the reality of those shares in daily trading.
Abdul Salam said that “companies in the Arab and international financial markets resort from time to time to study their possibilities and investment plans and measure the value of their real shares to the value of market shares in the stock market, and in this light take decisions to buy back a percentage of its shares to achieve a number of objectives ”.
He pointed out that “the objectives of companies to buy a proportion of their shares put on the stock market is to seek to enhance the earnings per share (dividend dividend distributed to shareholders), because of the absence of growth opportunities and investment in the company and the lack of opportunities to exploit the accumulated surplus, as well as when the company finds The market value of a stock is less than its real value. ”
He stressed that “during the period 2010 – 2016 US companies resorted to buy back a proportion of their shares from the stock market amounted to (3) trillion dollars,” adding that “in the first quarter of 2017 the value of shares that were bought back from the financial markets (133 To increase earnings per share, enhance market value and capitalize on its accumulated surplus. ”
Regarding the need to approve the share buyback proposal and the reasons for this, Abdul Salam said: “ From reading the data of joint stock companies and trading indicators during the period 2015-2019 shows the importance of the proposal that companies buy back a percentage of their shares, which can be summarized by the decline in the prices of shares traded for joint stock companies. At a mixed rate of more than 50 per cent during the period, due to the absence of growth and investment opportunities, and the decline in earnings per share due to the rise of capital for a significant number of companies and the inability to make profits in other companies.
“This proposal is one of the mechanisms of the international and Arab stock markets in order to enhance the value of the stock,” he said. “It is done under the most important conditions and controls, including the Companies Law and the Financial Markets Law.
The general assembly of the joint stock company shall approve the repurchase when discussing the final statements and accounts of the company, as well as specifying the period of retention of the shares purchased by the company and often does not exceed six months, and the shares purchased should not exceed 10% of the company’s share capital.
KE with the objective of that statement, with the importance of the note that shares the company to repurchase do not have the right to vote in the General Assembly meeting and do not have the right to receive profits until resale in the stock market after achieving the goal of buying them. ”