Infosys Seeks Shareholders' Nod For Amendment To Articles Of Association: 10 Points

In order to hand out cash to its shareholders, Infosys, India's second biggest software services exporter, has sought approval of its shareholders to change Articles of Association, which includes a provision for share buyback. The move by Infosys comes after big buyback programmes by rivals TCS or Tata Consultancy Services and Cognizant in the recent past. Analysts say top Indian IT companies are under pressure to return some of the huge cash piles on their books to shareholders in the form of share buybacks as the overall industry growth has hit plateau.

Here are 10 things on the share buyback plan:

1) The decision to seek shareholder's nod for a share buyback programme comes after two of former Infosys CFOs - T V Mohandas Pai and V Balakrishnan - recently exhorted institutional investors to raise questions about the huge cash pile on the company's books, saying investors have an obligation to protect their investment.

2) The management of Infosys recently faced flak from company's founders Narayana Murthy, Kris Gopalakrishnan and Nandan Nilekani who raised concerns including the pay hike given to Chief Executive Officer Vishal Sikka.

3) The founders were also unhappy with the former chief financial officer Rajiv Bansal's severance package that amounted to 173.8 million rupees, or 24 month's pay.

4) The founders and other former top officials wanted the company to share its money with shareholders , especially at a time when the company was not in a position to utilize its huge cash pile up.

5) A share buyback program is a way to return money to shareholders. The company buys back its own shares from the market, usually because the management thinks the shares are undervalued. Analysts prefer buybacks over dividends, as the former is a more tax-efficient way to return money to shareholders. (Also read: In Indian IT, hiring pattern heading for a big change)

6) Infosys, had liquid assets including cash and cash equivalents and investments worth Rs. 35,697 crore (about $5.25 billion) on its books at the end of December 2016.

7) There were reports that Infosys may consider a Rs. 12,000-crore share buyback, but the IT company has maintained that it "periodically" reviews the capital allocation policy. It had last week said that its management will take a decision on share buyback at an "appropriate time".

8) The company in its postal ballot notice uploaded on the company's website has included the "Power to purchase its own equity shares or other securities by way of a buy-back arrangement"

9) Infosys also said that as per Article 13, the power of the board to issue shares at a discount has been deleted in line with the Companies Act, 2013

10) The Infosys board on Thursday also approved recommendations of the Nominations and Remuneration Committee for revising the remuneration to COO and whole-time director U B Pravin Rao.