The Board of Directors of NetSol Technologies Limited (PSX: NETSOL) announced on November 25, 2024, its decision to sell 2 million treasury shares to eligible employees under the Company’s Share Option Scheme. The transaction aligns with the Listed Companies (Buy-Back of Shares) Regulations, 2019, and aims to enhance employee engagement and retention.
The decision follows the Company’s earlier buyback initiative under Section 88 of the Companies Act, 2017, which authorised the purchase of ordinary shares with a face value of Rs. 10/- each.
Upcoming Share Buyback Plan
In addition to the sale of treasury shares, NetSol Technologies’ Board of Directors has recommended a buyback of up to 10 million ordinary shares, subject to shareholder approval at an Extraordinary General Meeting (EOGM) scheduled for December 31, 2024.
Key features of the buyback plan include:
- Number of Shares: Up to 10 million shares.
- Purpose: Acquisition of treasury shares.
- Purchase Price: Based on the spot or current share price prevailing during the purchase period, as per Section 88 (8) and Regulation 8 (2) of the Listed Companies (Buy-Back of Shares) Regulations, 2019.
- Purchase Period: From January 3, 2025, to June 29, 2025, or until completion of the purchase, whichever comes earlier.
- Source of Funds: The buyback will be financed through the Company’s distributable profits.
Financial Impact
The Board anticipates a positive impact on the Company’s financial position, citing potential improvements in:
- Break-up Value: The intrinsic value of the Company’s assets per share.
- Earnings Per Share (EPS): Increased EPS due to reduced outstanding shares.
- Shareholder Opportunities: The buyback offers an exit option for shareholders wishing to partially or fully liquidate their investments, including those unable to participate in previous buyback programmes.
Market Reaction
NetSol Technologies’ stock closed at Rs. 135.68 on Monday, marking a 7.07% increase or Rs. 8.96, with 5.47 million shares traded on the Pakistan Stock Exchange.
This strategic initiative underscores NetSol Technologies’ commitment to strengthening its financial position and delivering value to its stakeholders. The combination of the employee share option scheme and the upcoming buyback programme highlights the Company’s proactive approach to capital management.
