Quote:
Originally posted by HeyAgain
How long do companies who just issued new IPOs have to wait until they are able to repurchase any outstanding shares that may be available to them?
i.e. They issued new shares at $10 per share, but has now dropped to $5. Can they repurchase the shares quickly after IPO issue to:
1) Reduce # of shares available
2) Drive up the current price of shares
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There's no restriction on this. There is a restriction on insiders *selling* stock issued to them, but the company can always repurchase on the open market. They have no way of *forcing* a sale, though. For instance, Prudential Financial's IPO was in late 2001 IIRC. By Feb of 2002 they were already buying shares back on the open market. The only thing I can think of that would limit this ability is that in the initial prospectus (the document issued for IPO purposes) the company is required to state what the money will be used for. I suppose theoretically if XYZ said "we're going to use the money to buy widgets" and instead put a lot of it into a buyback program, an investor could sue. However most "use of proceeds" sections are written so generally these days that it would be a tough case-- they're usually along the lines of "to help grow the business" or "to succeed in initiatives in x sector" or whatever.
Bob