SINGAPORE (Nov 30): Companies buy back their own shares for a variety of capital management reasons, such as to modify the company’s capital structure to improve the return on equity or to enhance earnings per share.

Singapore Exchange’s Listing Rules allow a company to purchase its own shares if it has obtained the prior approval of shareholders in a general meeting. The share buy-back is limited to 10% of the total number of issued shares as at the date shareholders’ approval is obtained for the share buy-back mandate.

In addition, companies buying back shares via on-market acquisitions must not pay more than 105% of the average closing market price of the security, i.e. the average of the closing market prices over the last 5 consecutive active trading days in the security (Maximum Purchase Price Limit).

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