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Odd-lot priority: why 99 shares, and how the election works

Albert Gasull, editor · updated 17 September 2026

When a company buys back its own shares by tender offer, it often takes odd lots first: a holder of fewer than 100 shares who tenders all of them is accepted in full, ahead of the proration that cuts back everyone else. That is why the number is 99. In a modified Dutch auction the priority only pays if the election is right: “No Specified Price” takes whatever price the auction clears at, while naming a price can leave the shares unbought. And the deadline that binds is the broker’s cutoff, which comes before the offer expires.

How the mechanism works

  1. The company announces how much stock it wants to buy and a price range. In a modified Dutch auction, the tenders decide where in that range the price lands.
  2. Each holder tenders at a price inside the range, or elects “No Specified Price”. When the clearing price is worked out, that election counts as a tender at the bottom of the range.
  3. At expiry the company sets the lowest single price in the range that lets it buy the amount it set out to buy, or everything tendered if less comes in. Every share bought is paid that same clearing price, including shares tendered below it. Shares tendered above it are returned.
  4. If more stock is tendered at or below the clearing price than the company wants, tenders are cut back pro rata. That is proration.
  5. The odd-lot clause sits in front of that cut. A holder who owns fewer than 100 shares in total and tenders every one of them is taken up in full, before anyone is prorated.

The sentence to look for

The clause to find is the odd-lot clause. In substance it says that holders of fewer than 100 shares who tender all of them are taken up in full, ahead of proration. The Arbutus Biopharma offer, filed with the SEC on Schedule TO-I, carries it.

The opposite sentence also exists, in terms. The Virtus NFJ fund tender, a self-tender for 25% of the fund at 99% of NAV, states:

“this tender offer will not have any special pro ration provision for odd-lot tenders, which means that all odd-lot tenders (including Shareholders who own fewer than 100 Shares) are subject to proration.”

In that offer, 99 shares are prorated like any other holding. Buying 99 buys nothing extra.

Worked example: Arbutus

Arbutus Biopharma’s offer is a modified Dutch auction for US$230m of its stock on Nasdaq, between US$5.00 and US$5.75 a share, expiring 29 September 2026 at 17:00 New York time. Issue #2 priced it from the 11 September close of $5.12.

  1. Cost of an odd lot: 99 × $5.12 ≈ $507.
  2. Clears at the $5.00 floor: ($5.00 − $5.12) ÷ $5.12 = −2.3%.
  3. Clears mid-range at $5.375: ($5.375 − $5.12) ÷ $5.12 = +5.0%.
  4. Clears at the $5.75 ceiling: ($5.75 − $5.12) ÷ $5.12 = +12.3%.
  5. Annualised: gross ÷ days to expected cash × 365. With cash expected around 6 October, the middle case works out near 83%.

Now the election. A holder who names $5.75 and sees the auction clear at $5.25 sells nothing: those shares were tendered above the clearing price, so they are not bought at all. A No Specified Price election cannot be excluded on price and is paid the clearing price, whatever it is. The odd-lot clause then keeps all 99 shares out of proration.

Editor’s view: the election box, more than the spread, is where odd-lot trades lose money.

Where it goes wrong

  • Naming a price. It feels careful and is expensive: any named price above the clearing price means no sale at all.
  • Holding 100 shares, not 99. The priority is lost and the whole position joins the prorated queue.
  • Selling after electing. Shares sold in the market after the election leave a short position against the tendered one.
  • Missing the broker’s cutoff. The Arbutus offer expires at 17:00 New York time on 29 September; the cutoff IBKR showed in a live account is 13:00 that day, four hours earlier. Across the five deals in issue #2 the gap ran from four hours to two days, with no rule behind it.
  • An offer without the clause. At Virtus NFJ, odd lots are prorated with everyone else.
  • An offer at or below the market. When a fixed-price bid sits at or below the market price, almost nobody tenders, and the odd-lot clause is worth nothing.

How to check it

  • The offer document has an odd-lot clause (fewer than 100 shares, all of them tendered, taken up ahead of proration) and no sentence saying odd lots are subject to proration.
  • The account shows fewer than 100 shares in total.
  • The election screen offers “No Specified Price”; in a Canadian bid the same box is called “Purchase Price Tender”.
  • The broker’s notice for the offer shows its own cutoff, earlier than the expiry in the offer document.
  • The floor of the range, set against the price paid, shows the floor case before any election: −2.3% at Arbutus.

Sources

Next guide: Canadian buybacks: the paid-up capital sentence that decides the trade

Author holds: Arbutus, yes, 99 shares, tendered (17 September 2026). 99 Shares is information, not advice, and nothing here is a recommendation to buy, sell or tender any security. Terms of use.