Share redemption vs Share buy-back


Is a share redemption the same as a share buy-back?


During a buy-back, the Company pays Shareholders the market value per share. In a redemption, the redeemable shares have a set call price.

There are two key differences between a redemption and a buy-back of shares.

The first is that a redemption applies to 'redeemable shares' expressly issued with the purpose, or the expectation, that they be redeemed, whereas shares in a buy-back do not need to be redeemable shares but can be any form of share. 

Also, when a Company issues shares and later decides to buy some of those shares back, this is considered a share buy-back. Whereas when Company specifies that it will redeem or buy-back shares when the shares are issued, this is considered a redemption.

Note: The call price also known as "redemption price"

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