Who can participate in the buyback of shares?

Two factors decide the eligibility of a person to participate in the buyback of shares:

1. Whether the person is an existing shareholder; and
2. Whether the shares are in Physical or Demat form.

To be eligible to participate in the Tender offer buyback, a person needs to be an existing shareholder as on the Record Date of the buyback offer. In case of an open offer, any shareholder holding the shares of that company during the buyback period can participate in the buyback offer.

In the Tender offer, the shares can either be in physical form or Demat form. While in the case of an open offer, generally only the Demat shareholders can be a part of the buyback offer.

Note: The buyback of physical shares in an Open offer requires the company to maintain a separate window for the buyback of physical shares and follow a set of guidelines, as stipulated by the exchange for the physical stock. Thus, to avoid this, not many companies allow the physical shareholders to participate in the open offer buyback unless their shares get dematerialized.