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

Under the SEBI buyback framework for listed companies, which statement is correct about a buyback through the tender offer route?

In a tender offer buyback, a record date is set and shareholders on that date may tender their shares to the company, with a reserved portion for small shareholders. It differs from the open market route, which uses the exchange order book, and board approval is required.

  1. AShareholders on a record date are offered the opportunity to tender shares, with a reserved category for small shareholdersCorrect
  2. BThe company buys shares anonymously through the stock exchange order book
  3. COnly promoters may tender shares
  4. DIt requires no board approval

Explanation

In a tender offer, a record date is fixed and eligible shareholders may tender shares proportionately; a reservation of the larger of 15% of the buyback quantity or the entitlement is made for small shareholders. Open-market purchase through the exchange order book is a different route. Board approval is always needed.

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