How to participate in share buyback process?

Share Buyback Process

Recently, one of the readers contacted me with the following question: How should one participate in share buyback process. Is it offline?

Normally the company sends you a prospectus of the share buyback via mail. You can fill the form and get back to them. Nowadays most companies do it online and via the Exchange. So basically a share buyback can be carried out in two ways :

1. Shareholders may be presented with a tender offer where they have the option to submit, a portion or all of their shares within a certain time frame and (sometimes) at a premium to the current market price. This premium is incentive to investors for giving up their shares rather than holding on to them.

2. Companies buy back shares on the open market as well. They do it over an extended period of time and may even have an outlined share repurchase program that buys back shares at certain times or at regular intervals.

 

Posted in Financial Planning.