The Toronto Stock Exchange has asked companies not to announce stock buybacks if they do not intend to purchase any of their own shares. The request was made as part of an attempt by the TSE to reduce the amount of “blanket bids” that are filed with the exchange and never acted upon.
According to a TSE spokesman, the exchange wants to persuade the company managers to file applications to buy back their own stock only when they plan to make purchases, not just because it gives them the option at some point in a given period.
Because a company’s intention to buy back shares often represents a material change in the affairs of the company, TSE officials want shareholders to be aware of when the purchase is going to occur.
Officially known as normal course issuer bids, share buybacks often occur in poor markets. Companies attempt to increase the value of their shares by buying back and cancelling the shares.
In the mining sector, Placer Dome (TSE) recently filed a renewal notice of its intention to make a normal course issuer bid for up to 23 million common shares, or 9.8% of a public float of 234.4 million shares. The company failed to act on a previous notice that expired in September.
Under the new notice, Placer Dome is required by TSE regulations to purchase the shares by Sept. 27, 1991.
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