On 10th October, 2022, Infosys announced that the company’s Board of Directors shall consider a proposal for buyback of equity shares of the Company on 13th October, 2022. You can check the announcement here.
Update: On 13th October,2022, Infosys announced that its Board of Directors have approved buyback of equity shares aggregating up to Rs. 9,300 crores through the open market buyback route for not more than Rs. 1850 per share. You can check the announcement here.
Latest Update: The open market buyback of Infosys will open on December 07, 2022, and will close on June 06, 2023 (that is 6 months from the date of the opening of the Buyback) or when the company completes the buyback by deploying the amount equivalent to the maximum buyback size (Rs. 9,300 crores). You can check the announcement here.
What is an open market offer?
There are two types of buybacks: tender offer and open market offer. Companies can choose either of these methods to buyback shares from their shareholders.
Open-market offer: The company can buy back its shares by actively buying from sellers on the exchange. The buyback period is mentioned in the buyback offer, and it can last for months to ensure that there is no significant price movement due to the buying activity.
Tender offer: The company makes an offer to buy back its shares at a particular price (offer price) at which the shareholders can tender, i.e., sell their shares.
How do I offer shares in open market buyback?
Giving shares directly to the company is not possible in open market buyback. Unlike tender offer, where you can offer shares directly to the company. In an open market buyback, the company actively buys the shares on stock exchanges.
At what price does the company buy back the shares in the open market?
In open market buyback, the company buys back the shares at prevailing market price. However, the company can only buy back shares at the maximum price it has set. In case of Infosys, the company can buy back the shares at only Rs. 1850 or lower, above that, the company cannot buy the shares.
How does the taxation work for open market buyback?
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.
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