Buyback is a process through which a company purchases its own shares from shareholders or in the open market for various reasons
The company decides the price and time for the buyback. There are two types of buyback and companies can select any of the options for the buyback
Types of Buyback
1. Tender offer
- In a ‘Tender Buyback’, companies offer to purchase their shares from the existing shareholders at a specific price and time period decided by the company. Buyback period typically can last up to 10 days
- The company announces a record date to decide the eligibility for the shareholders to participate in the buyback process
- The buyback price is usually at a premium price as compared to the current price
- To know how to apply buyback through the Tender offer process, refer the below links
How to apply for buybacks? (via Upstox Mobile application)
How to apply for a buyback? (via Upstox web portal)
- Buyback order will be charged @ ₹20 + GST. These charges are non-refundable irrespective of orders accepted/rejected/failed
- Statutory charges are also applicable during buyback transaction.
2. Open market buyback
- In this type of offer, the company purchases its shares directly from the market and does not directly approach the shareholders for buyback, unlike the tender offer, where shareholders can tender the shares
- The time and maximum price till they want to continue the buyback can be decided by the company
- The time period is usually longer in this type and may last for months
- You can not apply for open buyback offer via Mobile app/Portal.
Recent Example: Infosys
Note:
Investors will be eligible for buyback even if the shares are pledged.
Delisting will be charged @₹20 + GST