This corporate action involves shares being bought back by the company or an investor and are a tax event.
What is it?
A stock buyback, also known as a "share repurchase", is the process by which shares are bought back from the open market. There are two types:
- Tender: A tender offer is when an investor proposes buying shares from every shareholder of a publicly traded company for a certain price at a certain time. The investor normally offers a higher price per share than the company’s stock price, providing shareholders a greater incentive to sell their shares
- Open Market: a company has to buy shares on the open market, just like an individual investor would, at the market price.
How does it affect my account?
If you choose to sell your shares you will no longer hold those stocks and you will be issued with cash in return.
The selling of shares in a buyback is a tax event and the income is classified as a capital gain (or loss).