Concept of Buyback

Buyback or share repurchase is a corporate action in which a company buys back its shares from their shareholders. Generally, companies buy back shares at a price higher than the current market price.Although, there are many methods of buyback; the two most popular methods of buyback are: -

TENDER OFFER: -

1. The company makes a direct offer to shareholders to buy back its shares at a particular fixed price/offer price at which the shareholders can tender/sell their shares.
2. The amount is credited directly to shareholder’s primary bank a/c.
3. Investor can apply for buyback (tender offer) through Jainam.

OPEN MARKET OFFER: -

1. The company can buy back its shares by actively buying from sellers on the stock exchange at the current market.
2. Such buyback offer can last for months to ensure that there is no significant price movement due to the buying activity by the company.

To know about any corporate actions of current financial year, check this list .

How to modify buyback bid?
There’s no separate procedure for modification of buyback bids. The client have to first delete the existing bid made and then he can make a fresh and new buyback bid for the modifications or changes he wants.

Is there any floor price for Buyback?
No, there is no floor price for the Buyback.

Can a client who has a DP other than Jainam can apply for a Buyback through Jainam?
Such clients can apply for buyback through Jainam if the following two conditions are met:

the demat a/c of other DP from which they are applying must be mapped in the Jainam.
their trading a/c should be in the Jainam.

When and where does the shares are returned if the shares offered by the client are more than the acceptance ratio?
If the shares offered by the client are more than the acceptance ratio then:

the extra shares will be credited back to the demat account by the RTA.
on the next working date from the date of the bill.

If a client holds stock on the record date, but he sells the stock after it. Now, can he participate in buyback ?
In such a case, the client will be eligible because he was holding the stock on the record date.If the client wants to participate now in the buyback, then, he have to buy the stock first and then apply for buyback.

When does the fund/ payment is received for the shares accepted in the buyback by the company?
Payment is received on the next working day from the date of the bill.

Where does the fund/ payment is received for the shares accepted in the buyback by the company?
Generally, the amount of shares bought back by the company will be credited to the registered bank account of the shareholder. However, if the bank details of the clients are not proper then the client’s payment will be received in the broker’s (Jainam’s) account. Jainam will make the payment received to the client’s ledger later on.

Can a client whose account is dormant or inactive apply for buyback?
No, a client whose account is dormant or inactive cannot apply for buyback. Such clients have to first activate their trading or dormant account to apply for buyback .

What is the reason for the failure of the buyback payment ?
The most common reason of the payment failure is when the client's bank details are not proper.

To whom the payment will be made if the client’s payment is failed ?
The client's payment is received in the broker’s account and broker will make payment to client’s ledger.

When can a client bid for a buyback through Jainam?
A client can bid for a buyback through JPlus Jainam at any time from the 10:00 a.m. of the buyback opening date till 11:00 a.m. of the last date of the buyback period.