stocks]): The process of a company buying back its own shares. This makes sense for the company if more equity is available than is needed for investments. The share buyback usually increases the value of the shares remaining on the stock exchange (this reduces the number of shares in existence and, potentially, increases unit share price). In Germany, the nominal value of shares acquired in this way may not exceed ten percent of the share capital under current legislation. – In times of low interest rates, it is tempting for stock corporations to take out cheap loans and use this money to buy back their own shares. This artificially inflates the share price, and the purpose of the central bank’s low interest rate policy is to stimulate industrial investment in plant and equipment, not to subsidize share buyback programs. – A company’s policy of not buying its own shares, but entrusting this task to a third party – sometimes a company set up specifically for this purpose and located abroad – operates in a legal gray area. However, this acquirer acts entirely according to the instructions of the corporation in everything. In most cases, such tactics are considered wrongful acts and are classified as market manipulation. – See acquisition offer, market manipulation, cross-border, mandatory offer, self-tender, squeeze-out, pre-emptive shares. – Cf. BaFin Annual Report 2003, p. 208 (on the supervisory side), BaFin Annual Report 2004, p. 175 (risk of abuse), ECB Monthly Report of January 2006, p. 31 ff. (detailed presentation), ECB Monthly Report of May 2007 (textbook presentation; overviews; references).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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