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NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions

Under SEBI buyback regulations, which statement about a company's buyback of its shares is correct?

A buyback reduces the number of outstanding shares because the company repurchases and extinguishes its own shares, and it can be carried out through the tender offer route or the open market. It neither raises capital nor changes face value.

  1. ABuyback reduces the number of outstanding shares and can be done through a tender offer or open marketCorrect
  2. BBuyback increases the share capital of the company
  3. CBuyback is a free distribution of shares to shareholders
  4. DBuyback changes the face value of every share

Explanation

A buyback is the company repurchasing its own shares, which extinguishes them and reduces outstanding shares. It is done through a tender offer or open market route. It does not raise capital, is not a free distribution, and does not alter face value.

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