RegenCell BioScience Holdings (RGC)

[shinhari1309]

Why would a CEO buy shares in their company?

A Chief Executive might buy shares in their own company even though the market has the stock price falling for any number of reasons, but two of the commonest reasons are:

First, they see the stock as cheap. As CEO they know what is going to happen to the company in the next few weeks. Their inside knowledge about the companies prospects can be used to purchase a stock which has gone on sale. As long as the purchase is properly declared and noted they can buy the stock for their own portfolio.

The second reason may be to show the market that the company stock is being undervalued by the market. A CEO buying stock with their own cash is a strong sign that the company is doing well and that the market is wrong about prospects. Some companies even contract their senior officers to purchase a quantity of shares in the company in order to consider their various actions on the board of management more carefully. As stock holders in the company they hope that a CEO will be more thoughtful of the value of the stock than someone who has no interest due to their lack of skin in the game.

For some early-stage companies, it can be difficult to parse the many ways in which founders and executives may benefit whether or not the company succeeds, however, Regencell Bioscience, RGC ($rgc), has taken a more transparent approach that is well-aligned with shareholders’ long-term interests.

Since RGC’s incorporation in October 2014 up to the IPO, the company has been fully funded by its Chairman and CEO, Mr. Yat-Gai Au.

Upon the IPO, the Chairman’s loan of USD $3.25 million, was converted into ~342,000 common shares at the initial offering price of USD $9.50. He pledged not to draw salary and bonus of more than USD $1 until the company reaches USD $1 billion market capitalization. He also will not award share options for himself.

Since the IPO, RGC’s Chairman and CEO has purchased over USD $5 million in common shares on the open market. Most recently, he purchased 49,010 shares (~ USD $1.1 million) between April 1 and May 16, 2022, bringing his ownership to 81% of outstanding shares (~10.5 million).


https://www.forbes.com/advisor/investing/stock-buyback/#:~:text=A%20stock%20buyback%20is%20when,fund%20operations%20and%20other%20investments


https://www.quora.com/Why-would-a-CEO-buy-shares-in-their-company-when-the-company-stock-is-selling-off/answer/William-Elliott-29?ch=10&oid=336350002&share=85576911&srid=hIzcnI&target_type=answer

https://newsfilter.io/articles/regencell-bioscience-holdings-limited-announces-over-5-million-ordinary-share-purchases-by-ceo-3b36a9b6af854a3aa5240d3148ccbd80