How to apply for Buyback through the open market?
A buyback is a process in which a company buys back its own shares from its current shareholders. This can be done through a tender offer or by purchasing shares on the open market. To learn more about Buyback, see What is a Buyback?
Previously, only a tender offer ensured that the company would be the sole buyer of shares in a buyback. Selling shares in the open market during the buyback period carried uncertainty regarding the company's repurchase. However, in order to facilitate open market offers, exchanges have introduced a series called BO on NSE (PDF). These series allow clients to participate directly in open buybacks through their broker's platform. To learn more about open market buyback, refer to NSE FAQs (PDF).
To participate in a buyback through the open market and sell shares directly to the company on Kite, search for the name of the stock followed by BO for NSE or 7 for BSE. For instance, if EMAMILTD is actively buying stocks through the open market in a buyback on NSE, clients can search for EMAMILTD-BO in the search bar and place a sell order to sell their shares directly to EMAMILTD.
Did you know?
- The buyback through the open market can only be conducted between 9:45 AM to 3:00 PM.
- Clients can only sell shares in the BO or T series (ending with 7), as buying is not allowed. The buyer in this series is always the company conducting the buyback.
- Selling is only permitted for shares that have been settled in the trading account. T1 holdings or shares that are yet to be settled in the trading account cannot be sold.
- Only CNC sell orders with Immediate (IOC) validity are allowed. Iceberg orders, disclosed quantity orders, After Market Orders (AMOs), and Cover orders are not allowed in this series.
The amount in a buyback is received after deducting the buyback tax. The company buying back the shares in a tender offer or open-market offer pays all taxes on the buyback offer. Buyback transactions are shown separately in the Console tax P&L, and there won’t be any additional tax liability in such a case.
All the current and upcoming corporate actions can be tracked on this list (DOC).