Buy-back
Buy-Back is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than the market price.
When it buys back, the number of shares outstanding in the market reduces.
Buy-back can be carried out in two ways:
One, the company presents a tender to shareholders and gives them an option to sell a part of or all their shares back to the company at a premium for a limited period of time known as the ‘buyback period’.
Two, the company buys back its shares on the open market over a period of time.