What is open market buyback?
How it is different from tender buyback?
and how a retail investor can participate in open market buyback?
@Dear4u : Live examples of Open market buyback are Orient cq , Natco pharma ,TD power system ,Cyient ,Selan explo, Persistent etc . shareholders can not participate directly in open market buyback as the company buys shares from nse/bse through a broker at prevailing market price subject to maximum price approved. such buybacks are open for 6 months.
Just curious… Company can not buy shares from exchanges through broker without any open market buyback offer?
Ie is open market buy back offer a compulsion to buy shares by company from exchanges?
Open market buyback means company has to buy shares from nse/bse through a broker at different prices subject to maximum price approved.
Proportionate method buyback /fixed price buyback /tender method buyback means company will buy shares directly from shareholders be it promoters and non promoters.
That’s my query… Company can not buy it’s share from secondary market with out a buyback offer. If company wants to buy its share it has to come up with an open market buyback offer. Am I right?
COMPANY (not promoters ) can not buy shares either from shareholders directly or from open market purchase except through buyback which means for reducing the serviceable equity by extinguishing the bought back shares.
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This is very interesting topic. I was also thinking that shares buy back should be done through public offer. However, it might be some part of regulation that is unknown to me that these companies are using in order to make selective buybacks
how to participate in open mkt buy back ? through kite or console ?
https://zerodha.com/marketintel/bulletin/272226/open-market-buybacks-october-2020
Open market buyback means company will buy shares directly from NSE/BSE through a broker like yoy and me buy …during a period of 6 months at different price levels subject to max price approved per share . shareholders can not participate directly in such buybacks .
how do i participate in it ? through kite or console ?
You can not participate in OPEN market buyback .
Sun pharma had an open market buyback at a maximum price of 425 per share during 26 March to 25 September 2020 (6 months ) THE COMPANY FAILED TO BUY EVEN A SINGLE SHARE !
it means there is no legal binding ??? @ShubhS9
company will announce open market buyback at a price and if available will buy otherwise not ?
Many companies close the buyback midway before 6 months .
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Sun Pharma had specified that it will purchase shares at price not exceeding Rs. 425. If you take a look at charts they had this opportunity only until April 8th, post that price of Sun Pharma traded well above the specified buyback price. They cannot buyback the shares at price more that what is specified.
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I understand the company will not buyback at a price higher than approved by board /postal ballot of shareholders but MY QUESTION IS when the company do not even buy a single share during 6 month there should be some consequences for not using the funds but simply announcing to do so ! ***isnt it a price sensitive aspect as market view buyback of any kind as a positive for future growth because serviceable equity will reduce .
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This is from Sun Pharma’s Public Announcement before the Buyback offer.
If the Company is not able to complete the Buy-back equivalent to the Minimum Buy-back Size, except for the reasons mentioned in the Buy-back Regulations, the amount held in the Escrow Account (up to a maximum of 2.5% of the Maximum Buy-back Size), may be liable to be forfeited and deposited in the Investor Protection and Education Fund of SEBI.
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Thanks for this answer but isn’t it very amusing … whose money is liable to be forfeited …company’s money means shareholders money ! 