open offer is an offer by the company itself to buy back it's shares from the open market. After taking shareholder's approval, the company will announce the rate and it will buy back at certain rate approved by the shareholders.
Buy back may be in 2 ways.
One is from the open market. Suppose, the shareholder has approved for buy back at Rs.50/- per share and in the open market the shares are available for less than that amount, shares may be bought in the open market.
Second is to offer at the approved rate to all the shareholders. In this case, the form for offer will be given to each shareholder. If a shareholder wants to sell at the rate to the company itself, they can offer by surrendering that number of shares at the prescribed amount.
The shares thus bought will be extinguished. Payment will be made using the accumulated reserves. This results in reduction of share capital and reduction of reserves.
