A company purchase its own shares of Rs 5,00,000 from the market. What this process is called ?

When a company purchases its own shares from existing shareholders through the open market, it is called Buy-back of Shares.

In this transaction, the company is reducing its share capital by repurchasing shares worth Rs 5,00,000 from the market. This is done to:

• Return surplus cash to shareholders
• Improve earnings per share (EPS)
• Enhance shareholder value
• Reduce equity base

The other options represent different concepts:

Re-issue of Shares → Reissuing previously forfeited shares to new shareholders

Bonus Issue → Issuing free shares to existing shareholders from reserves/profits

Forfeiture of Shares → Cancelling shares due to non-payment of call money by shareholders

Since the company is actively purchasing its own shares from the market using cash, this is a classic case of buy-back.