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What are the steps and dates in a Buyback Process?

  • Board Meeting approves the proposal of buyback : This is the company’s internal meeting where the board of directors passes a resolution for buyback of shares.
  • Public announcement for Buyback: Company has officially made a public announcement of all the material information within two working days from the date of the resolution in at least one English National Daily, one Hindi National Daily and a Regional language daily.
  • Copy of public announcement is submitted to SEBI.
  • Record Date for determining the Buyback Entitlement and the names of Eligible Shareholders: A company making a buyback offer, announce a record date for the purpose of determining the entitlement and the names of the security holders, who are eligible to participate in the proposed buyback offer. It is especially important for short term gainers to buy and keep the company shares in their demat account by or before this date. Only the stocks which are available to investors account on the record date will be eligible for buyback process.
  • Post record date, Registrar validates the entity of holding in the demat account and communicate to the respective holders about the number of shares eligibility and other process. The offer for sale and tender forms will then be available online on your broker’s website.
  • Date of Opening of the Buyback Offer: Investors are allowed to submit the tender form within the period of opening and closing of the buyback offer. The offer for buy back usually remains open for a period of ten working days. You can submit the form online through your broker’s website (ICICI Direct, Zerodha, ProStocks) or call your broker to place your holding under OFS. If an investor doesn’t want to participate in buyback offer, no action is required and their holding is safe in the demat account and can be sold in the open market.
  • Date of Closing of the Buyback Offer: This is the last date to participate in buyback process. If you buy shares immediately after the buyback announcement, and the buyback price is not much higher than the prevailing price, you won’t benefit, since you will also have to pay short-term capital gains tax of 15%. Carefully consider the offer price, before tendering your shares under buybacks, because you stand to gain only if the buyback offer price is significantly higher than the prevailing market price and the quantum of the buyback amount is substantial.
    There are chances when big buyback offer start and investor start locking their holding with Registrar for buyback offer, market start reacting in a positive direction and stock price move above the buyback price, in such case it is better to sell your holding in the open market. Usually smart investors wait until the closing dated before deciding to sell in buyback process or open market.
  • Last date to receive the completed tender forms and other specified documents, including physical equity share certificates by the Registrar.
  • Last date of verification of tender forms by the Registrar: This is a process related step carried by Registrar.
  • Last date of intimation of the Stock Exchange regarding acceptance / non- acceptance of tendered Equity Shares by the Registrar.
  • Last date of settlement of bids on the Stock Exchanges: Registrar get final approval from the exchange.
  • Last date of payment to shareholders/ dispatch of unaccepted share certificate(s) by the Registrar/ return of unaccepted demat shares by Stock Exchanges to Shareholder Broker/ Eligible Shareholders.
  • Last date of extinguishment of Equity Shares bought back.
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