Question

A company can buy-back its own shares or other specified securities by the following methods except:

• A. From the existing security holders on a proportionate basis through the tender offer
• B. From open market through book-building process or stock exchange
• C. From any person through negotiated deals on the stock exchange
• D. From odd-lot holders

Hint:

Share buybacks can occur through specific methods; negotiated deals on exchanges are not one of them.

Answer 1

The Correct Option is C

A company can repurchase shares through the following methods:
Tender offer allows the company to offer to buy back shares from existing security holders at a specified price.
Open market repurchases can be done through the stock exchange, following a book-building process.
Odd-lot holders (small shareholders) can also be targeted in a repurchase program.
However, buying shares through negotiated deals on the stock exchange is not a standard method for share buybacks. This method is not allowed as it would be considered a form of insider trading.