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 demat account. T1 holdings or shares that are yet to be settled in the demat 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.
- Tax on buybacks before 1st October 2024 are paid by the company buying back the shares. Tax on buybacks after 1st October 2024 is to be paid by the shareholders. The amount received from buybacks is considered as deemed dividends, and taxed based on the slab rates. The cost of acquiring shares tendered in a buyback will be treated as a capital loss (either short term or long term) for shareholders, which can be offset against other capital gains or carried forward for up to 8 years.
All the current and upcoming corporate actions can be tracked on this list (DOC).
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