Eris Lifesciences – Buyback Relief

Eris Lifesciences: Buyback relief

The rally witnessed in Eris Lifesciences share price appears to have fizzled out given the limited upside and the prospects of tendered share getting acquired under the buyback offer.

The share price gained as much as 5% intraday on December 16 after getting tax exemption on share buyback.

It has trimmed some of its gains, even after getting clarity on the taxation issue.

The Taxation Laws (Amendment) Act, 2019 which has been notified in Gazette of India on December 12, 2019, has provided relief to the company from the applicability of buyback

It announced its intention to buy back up to 17,39,130 equity shares at Rs 575 per share aggregating up to Rs 1,000 crore.

Although the announcement was published on July 5, the decision to this effect was taken on July 4.

Since the decision to buyback equity shares was taken a day before the government making amendments to share buyback taxation norms, the company stands to benefit from the tax relief applicable previously.

The Government granted relief to listed companies which had made a public announcement ‘before 5th July 2019’, in terms of the language of the Taxation Act December 2019.

Eris can now take up this development before the applicable regulator and after obtaining the necessary clearances and approvals proceed with the Buyback at the earliest.

Net net shareholders who apply for this buyback would surely gain from the fact that the recently introduced buyback tax will not be applicable here.

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