“Buyback, also known a share repurchase, is when a company buys its

1.	“Buyback, also known a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market”. Why it Buyback? How does company buy it?
Answer» A buyback can be seen as a method for company to invest in itself by buying shares from other investors in the market. Buybacks reduce the number of shares outstanding in the market. Buy back is done by the company with the purpose to improve the liquidity in its shares and enhance the shareholders’ wealth. Under the SEBI (Buy Back of Securities) Regulation, 1998, a company is permitted to buy back its share from: a) Existing shareholders on a proportionate basis through the offer document b) Open market through stock exchanges using book building process c) Shareholders holding odd lot shares.

“Buyback, also known a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market”. Why it Buyback? How does company buy it?

Answer»

A buyback can be seen as a method for company to invest in itself by buying shares from other investors in the market. Buybacks reduce the number of shares outstanding in the market. Buy back is done by the company with the purpose to improve the liquidity in its shares and enhance the shareholders’ wealth.

Under the SEBI (Buy Back of Securities) Regulation, 1998, a company is permitted to buy back its share from:

a) Existing shareholders on a proportionate basis through the offer document

b) Open market through stock exchanges using book building process

c) Shareholders holding odd lot shares.

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