The term Buy-back includes.

Buying of company’s own stock from open market in order to reduce the number of outstanding shares. It is one of the prominent modes of capital restructuring. It is a corporate action in which a company buys back its shares from the existing shareholders usually at a price higher than market price.

When it buys back, the number of shares outstanding in the market reduces. By reducing the number of shares outstanding in the market, buy-backs increase the proportion of shares a company owns.

A company whether public or private, may purchase its own shares (hereinafter referred to as “buy-back”) out of:

 (i) its  free reserves; or

 (ii) the  securities premium account; or

(iii) the  proceeds of any shares or other specified securities.