Understanding the Extinguishment Date in Share Buybacks

What does extinguishment date mean in share Buybacks?

The extinguishment date refers to the timeline when a company, after buying back its own shares or other securities, must destroy them. This process is typically completed within a week post the buyback's conclusion. The aim is to reduce the company's share capital and deter potential misuse of the repurchased shares. Subsequently, the company is legally bound to inform the Registrar of Companies about the buyback within a month after the shares are extinguished.

For example, TCS Limited announced a buyback offer worth ₹18,000 crore at ₹4,500 per share through a tender offer route on 12th January 2022. The buyback's record date was set for 23 February 2022, while the extinguishment date was established for 8th April 2022. TCS Limited then reported the buyback to the Registrar of Companies on 15 April 2022.

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