What is a Buyback?

What is a buyback or share?

Buyback or share repurchase is a strategic move where a company repurchases its shares from shareholders. This corporate action is initiated with the aim of acquiring shares at a price higher than the current market value. There are two methods companies may opt for: tender offer and open-market offer.

Tender Offer:

In a tender offer, the company extends an invitation to shareholders to sell their shares at a specific price. The credited amount is transferred directly to the shareholder’s primary bank account.

Open-Market Offer:

Alternatively, a company can actively repurchase shares from sellers on the exchange during a specified buyback period. The amount is credited to the shareholder’s trading account. You can check the buyback period on the SEBI (WEB) website. 

In a buyback offer, whether through a tender offer or open-market offer, the company bears all taxes associated with the transaction.