Common
Share repurchase
Reacquisition by a company of its own shares
Share repurchase
Share repurchase, also known as share buyback or stock buyback, is the reacquisition by a company of its own shares. It is an alternative way of returning money to shareholders than dividends. After a repurchase event, the company's stock price is now proportionally higher because of the smaller number of shares outstanding. Repurchases allow stockholders to potentially reduce taxes, by paying the usually lower capital gains tax when the shareholder chooses to sell the stock rather than the higher ordinary income tax rate that must be paid when the dividends are distributed. In most countries, a corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity; that is, cash is exchanged for a reduction in the number of shares outstanding. The company either retires the repurchased shares or keeps them as treasury stock, available for reissuance. Under U.S. corporate law, there are six primary methods of...
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