In January 2013, the SAVB proposed a change to the accounting model for pension operations. This amendment would require that pension or redemption assets that meet all of the following criteria be recognised as collateral-backed bonds: other markets, such as Spain and Italy, often and sometimes exclusively use sale/buy-back agreements due to legal difficulties in these legal systems with regard to pension operations and margins. This type of operation, also known as „pensions“ and „product financing agreements“, takes place between two parties. The first party „sells“ its inventory to the second part, with the express promise to buy back the inventory at a predetermined price in time or at a future date. Ultimately, undocumented sales/redemptions are considered riskier than a retirement transaction. Seller buyouts are common in the early stages of condominium development. In the redemption provision, a franchisee often indicates that he has the first right to buy back the franchise if the franchisee opts for the sale. Another example is a manufacturer selling bulk goods to a distributor. The distributor experienced financial difficulties and decided to terminate the contract. If, in the buy-back clause, the manufacturer stipulates that the distributor must resell the items to the manufacturer, it is not possible, in this case, for the items to be liquidated or sold at reduced prices.

Most of the scenarios outside of real estate and insurance, which generate redemption provisions, are for business. For example, a franchisor – for example Curves or The UPS Store – may sell a franchise to a franchisee. Franchisors often include a redemption provision where they have the first right to buy back the franchise if the franchisee chooses to sell. In addition, a manufacturer may sell bulk goods to a trader who then finds himself in financial difficulty or terminates the contract. In order to prevent the distributor from selling the product in liquidation or at significantly reduced prices, the manufacturer contains a buy-back clause that obliges the distributor to resell the items to the manufacturer. A share repurchase agreement is a contract between a company and one or more of its shareholders, under which it can buy back part of its own common shares. The document identifies the parties involved and covers the total price of the participation, the method of payment and the date of the transaction. The contract also contains assurances and guarantees on behalf of both parties, in the general interest that they are legally able to carry out the operation. . . .

Categories: Allgemein