Escrow Account

An Escrow Account acts as a secure holding account managed by a bank or trustee, used to protect the interests of both parties in a transaction such as an IPO or buyback until agreed conditions are fulfilled.

Key points:

Used to hold buyback consideration or promoter shares during corporate actions

Money or shares are released only when specific conditions, like regulatory approval, are met

Adds a layer of security and trust to large financial transactions

Example:

In a buyback, a company may deposit the buyback amount into an escrow account, which is then released to shareholders once their shares are verified and accepted.