Buyback of Shares Explained: Process, Record Date & Acceptance Ratio

On June 5, 2026, lakhs of Wipro shareholders became eligible for something the market hands out only a few times a year: the right to sell shares back to the company at ₹250 each, when the stock was trading around ₹203. That is a premium of nearly 23%, and the window to tender those shares is open from June 11 to June 17.

This is a buyback of shares in action, and Wipro's ₹15,000 crore offer is the biggest in the company's history. But here is what most shareholders discover only after they participate: tendering 100 shares does not mean the company buys all 100. How many get accepted depends on a number called the acceptance ratio, and understanding it is the difference between a good outcome and a disappointing one.

This guide walks through the entire buyback process, what a buyback is, how the tender offer works, what the record date means in a T+1 market, how entitlement and acceptance ratios are calculated (with actual math), and how the tax treatment changed twice in two years.

What is a buyback of shares?

A buyback of shares is a corporate action in which a company purchases its own shares back from existing shareholders and extinguishes them. The total number of shares outstanding falls, so earnings per share rises, and every remaining shareholder owns a slightly larger slice of the company.

In India, buybacks are governed by Section 68 of the Companies Act, 2013, and the SEBI (Buy-Back of Securities) Regulations, 2018. Think of it as the reverse of an IPO: instead of issuing new shares to raise money, the company returns surplus cash to shareholders and shrinks its equity base.

Why companies buy back their own shares

Companies rarely say it plainly in the announcement, but a buyback usually serves one or more of these purposes:

• Returning surplus cash. Cash-rich businesses with limited reinvestment needs, particularly Indian IT companies, use buybacks as a structured way to return money. Wipro, TCS and Infosys have all run multiple buybacks over the past decade.
• Signalling undervaluation. When management buys the stock at a 20-25% premium, it is telling the market it believes the shares are worth more than the current price.
• Improving financial ratios. Fewer shares outstanding means higher EPS and higher return on equity, with no change in actual profits.
• Raising promoter stake. If promoters do not tender, their percentage holding rises automatically as the share count shrinks.

A word of caution from experience: a buyback is a statement about cash, not always a statement about value. Plenty of companies have bought back shares at prices that looked generous at the announcement and expensive two years later. Treat the premium as information, not as proof.

How a buyback works in India: the tender offer process

Until 2025, companies could also buy back shares anonymously through the open market. SEBI phased that route out, cutting the maximum size permitted through it from 15% of paid-up capital and free reserves to 10%, then 5%, before discontinuing it entirely from April 1, 2025, because exchange-based buybacks favored institutions and algorithmic traders over retail shareholders. Today, the tender offer is the only route, and it follows a fixed sequence:

1. Approval. The board can approve a buyback of up to 10% of paid-up capital and free reserves on its own. Anything larger, up to the 25% ceiling, needs a special resolution from shareholders.
2. Public announcement. The company announces the buyback size, price, and other terms within two working days of approval.
3. Record date. The company fixes a cut-off date. Whoever holds shares in their demat account on this date is eligible to participate.
4. Letter of offer. Eligible shareholders receive a letter of offer and tender form stating their buyback entitlement.
5. Tendering window. The offer stays open for exactly five working days. You place a bid through your broker on the NSE or BSE acquisition window, and the tendered shares are blocked in your demat account.
6. Acceptance. Once the window closes, the company verifies bids and applies the acceptance ratio to decide how many of each shareholder's tendered shares it will buy.
7. Settlement. The buyback amount is credited to your bank account, unaccepted shares are returned to your demat account, and the company extinguishes the bought-back shares within seven days of completing the offer.

In Wipro's case: the board approved a ₹15,000 crore buyback of 60 crore shares at ₹250 per share; the record date was June 5, 2026; and the tendering period runs from June 11 to June 17, 2026.

The record date, and the T+1 detail that catches people out

The record date is the single most important date in any buyback. Own the shares in your demat account on that date and you are in; miss it, and no amount of buying afterwards will make you eligible.

Here is the part that trips up even experienced investors. Indian markets settle on T+1, meaning shares you buy today reach your demat account the next trading day. So to be eligible for a buyback with a record date of June 5, you needed to buy the shares on or before June 4. Buying on the record date itself is one day too late.

Two more points worth being precise about:

• Eligibility is fixed on the record date, but you must still be holding the shares when you tender them. If you sell after the record date, you have nothing left to offer.
• The record date works the same way across corporate actions. The mechanics are identical for dividends and bonus shares, so once you understand it here, you understand it everywhere.

Entitlement ratio vs acceptance ratio: the maths that decides your profit

These two terms get used interchangeably in casual conversation. They are not the same thing, and the gap between them is where buyback outcomes are actually decided.

Buyback entitlement

Your entitlement is printed in the letter of offer. It is calculated category-wise:

Entitlement ratio = shares the company will buy from your category ÷ total shares held by all shareholders in that category

Suppose a company is buying back 1 crore shares, of which 15 lakh are reserved for small shareholders. If all small shareholders together hold 60 lakh shares on the record date, the small-shareholder entitlement ratio is 15 ÷ 60 = 25%. You hold 400 shares, and your entitlement is 100 shares.

Acceptance ratio

The acceptance ratio is what actually happens:

Acceptance ratio = shares accepted by the company ÷ shares tendered by shareholders

This number is known only after the window closes, and it is almost always different from the entitlement ratio, because participation is never 100%. Some shareholders forget. Some never see the letter of offer. Some simply do not want to sell. Every share they fail to tender enlarges the pool available to those who do.

Continuing the example: the company wants 15 lakh shares from small shareholders, but suppose only 20 lakh shares are tendered in that category. The acceptance ratio becomes 15 ÷ 20 = 75%, three times the 25% entitlement. Tender all 400 of your shares, and the company accepts 300, not 100.

This leads to the single most useful rule in any buyback: always tender your entire holding, not just your entitled quantity. Your entitlement is effectively a priority claim, not a ceiling. Shares tendered above entitlement are accepted proportionately from whatever the non-participants leave on the table, and that pool is usually substantial.

The small shareholder advantage: 15% is reserved for you

SEBI regulations reserve 15% of every buyback for small shareholders, defined as those whose holding in the company is worth ₹2 lakh or less on the record date.

This is one of the few places in the Indian market where the rulebook explicitly favours retail investors. Small shareholders compete only against other small shareholders for their reserved 15%, instead of being crushed by institutional volumes in the general category. The ₹2 lakh test is applied to the market value of your holding on the record date, which in Wipro's June 2026 buyback put the cut-off in the region of 800 to 1,000 shares.

A pattern worth knowing: acceptance ratios in the small-shareholder category of large IT buybacks have historically run well above the general category, precisely because retail participation is patchier. The reservation only pays you if you actually tender.

Tax on buyback of shares: three regimes in three years

This is where most buyback guides are out of date, because the rules changed in October 2024 and then changed again in April 2026. Here is the full picture:

The practical effect of the 2026 change is large. Under the deemed-dividend regime, a shareholder in the 30% slab who tendered ₹1 lakh worth of shares owed roughly ₹30,000 in tax regardless of what the shares originally cost. Under the current rules, if those shares cost ₹80,000 and were held for over a year, the tax is 12.5% of the ₹20,000 gain, or ₹2,500, and possibly nothing at all if the gain sits inside the ₹1.25 lakh exemption.

This is also why Wipro's June 2026 buyback drew such strong retail interest. It is among the first large buybacks to fall entirely under the new capital gains regime, and the after-tax economics of tendering are the best they have been since 2024.

Should you tender your shares? A working checklist

The headline premium is not your return. Run through these four questions before deciding:

• What is the realistic acceptance ratio? A 23% premium with 40% acceptance is a very different trade from the same premium with 100% acceptance. Work the blended number: on 100 shares bought near ₹203, a 40% acceptance at ₹250 earns about ₹1,880 on a ₹20,300 position, roughly 9%, before the remaining 60 shares move at all.
• What happens to the unaccepted shares? Stocks frequently drift lower once the record date passes and arbitrage buyers exit. If the price gives back most of the premium, your gain on accepted shares can be offset by losses on returned ones.
• Do you want to own this business? Tendering is a sell decision. If you believe in the company's next five years, handing shares back at a 23% premium may be the worse trade. If you were looking for an exit anyway, the company just offered you one above market price.
• What is your holding period? Under the new tax rules, crossing 12 months drops your rate from 20% to 12.5%. If you are a few weeks short of long-term status, the calendar is now part of the decision.

And the trap to avoid: buying a stock just before the record date purely to capture the premium. Everyone else ran the same math. The pre-record-date price usually already reflects the expected acceptance ratio, and the post-record-date correction takes back much of what the premium promised.

The rulebook at a glance

One development to watch: SEBI released a consultation paper in 2026 proposing to bring back the open market route now that the tax distortion that killed it has been resolved. If that goes through, companies will again have two ways to buy back shares, though the tender offer will remain the route that matters for retail investors.

Last updated: June 2026. Buyback rules referenced: Section 68 of the Companies Act, 2013; SEBI (Buy-Back of Securities) Regulations, 2018 (as amended); Finance (No. 2) Act, 2024; Finance Act, 2026. For live corporate action updates like the Wipro buyback and LIC bonus issue, follow the Sahi blog.