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What does share buy-back mean?
The term share buy-back is used when a company is interested in getting its shares back from its shareholders.
Why is it so?
There are various reasons for company to do so some of which are listed below:
How is it done?
This can be done in open market or through tenders. In the open market, a certain price of the shares is announced by the company and the selection takes place from the applications given by the shareholders if the price matches with the minimum set by the company. On the contrary, in tenders, the shares are bought back by the company at price as specified by the company. The time period here is fixed to be a fortnight which has no restriction for open markets.
Is it compulsory for investors to accept the offer?
There is no compulsion on the investors to sell off their shares. They are free to choose upon certain factors and make their own decision. The certain factors to be determined may be the number of shares, reason the company is interested to buyback, future planning of the company etc.
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