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One type of buyback is an action in which a company buys its own stock in the open market. This is one way in which a company can offset the dilutive effect of its stock plan. These shares become Treasury stock (as explained in an article at the website Accounting Tools).

Another type of buyback is a company's exercise of its repurchase right to buy shares back from employee shareholders, an action usually taken by a privately held company when an employee stops working for it. See also a related FAQ on this type of buyback, and compare the term repurchase right.

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