What is a Buyback? How do I participate in an Open Market Buyback? How is it different from a normal buyback?

A Buyback is a corporate action in which a company buys back its shares from the existing shareholders, usually at a price higher than market price. When a company buys back its shares, the number of shares outstanding in the market reduces. You are eligible for a buyback if you hold stocks on the record date in your account.

There are two methods of Buyback:

Tender Offer -

In this form of Buyback, shareholders are provided with a specific time and price. The price offered is higher than the market price. The shareholders need to hold the stock in DP (Depository Participant) on the record date to be eligible for a buyback.

Please follow these steps to apply:

Step 1: Login to the Kotak Stock Trader App

Step 2: Click on ‘more’

Step 3: Click on ‘Buyback’ under core investment products

Step 4: Select the company

Step 5: Provide your order details and click on ‘submit’

Open market offer -

In this form of buyback, the company buys the shares from sellers on the stock exchange. The offer document will mention the period during which a company will buy back its shares.

There is no specific duration, and this period can extend for a long time. The company’s brokers transact on behalf of the company.