Flipkart planning to go private with buying shares back from Small Investors
Flipkart ( India’s largest e-commerce company ), which is registered as a public company in Singapore is planning to buy back its shares to get a status of a private company.
As per reports from ET, Flipkart had put $400 million apart to buy shares back from it’s small investors.
In private limited company in Singapore, the maximum number of shareholders is limited to 50. A private company is one whose memorandum or articles of association restricts the right of its members to transfer their shares in the company.
The restriction on the right to transfer shares in a private company usually takes the form of a requirement that the transfer be first approved by the company’s board of directors or a requirement that the shares be first offered to be transferred to existing shareholders.
Whereas in a Public company, the number of shareholders can be more than 50. Public companies may or may not be listed on a stock exchange. Where they are so listed, they are usually referred to as “listed companies”.
Flipkart has about 145 entities as shareholders, as per its filings with Singapore’s Accounting and Corporate Regulatory Authority. Compliances for the public company in Singapore are higher than the private company.
This news is coming when Walmart is investing a big amount in Flipkart to Buy 52% -86% share in Flipkart. Tiger Global and SoftBank are largest shareholders in Flipkart, holding 20% each in the company.
Flipkart facilitated partial exits to investors last year through a share buyback after SoftBank invested $2.6 bn in the company in August. Flipkart spent about $1 billion to acquire part of equity held by large investors including Tiger Global and Accel India.