Sebi plans to revise share buy-back regulations

Sebi has carried out a review of the current buy-back norms in order to simplify the language, remove inconsistencies and update the references to the new Companies Act

PTI
Updated17 Jun 2018, 12:08 PM IST
The revised framework for share buy-backs is likely to be discussed during the Sebi’s board meeting on 21 June.
The revised framework for share buy-backs is likely to be discussed during the Sebi’s board meeting on 21 June.

New Delhi: Markets regulator Securities and Exchange Board of India (Sebi) plans to revise the regulations for share buy-backs wherein more clarity would be provided on various aspects, including on the requirement to make public announcements, according to a senior official.

The watchdog has carried out a review of the current buy-back norms in order to simplify the language, remove inconsistencies and update the references to the new Companies Act that came into force in April 2014.

The official said definition of buy-back period and clarity on the requirement to make public announcement for buy-back offer after declaration of postal ballot results would be provided in the amended regulations.

Besides, explanation for ‘free reserves’ in line with Companies Act, 2013 would be part of the new framework. The revised framework for share buy-backs is likely to be discussed during the Sebi’s board meeting on 21 June, the official said.

According to the official, said ‘buy-back period’ would be defined as the time between date of authorisation for buy-back by a company’s board of directors and the date on which the payment is made to shareholders who have accepted the offer. Another proposed change is with regard to filing requirements and time for public announcements.

The official said that a company, that has been authorised to do the buy-back of shares, should make a public announcement within two working days of its declaration. Two days would be from the “date of declaration of results of the postal ballot for special resolution/board of directors”, the official added.

A company can undertake buy-back of shares out of its free reserves and securities premium account, among others. However, buy-backs cannot be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities. Free reserves include securities premium account.

The official also said that clarity would be provided on timelines with respect to various requirements under buy-back regulations.

Earlier this year, a discussion paper on new buy-back regulations was issued in March this year. More than 150 comments were received from various entities on the discussion paper and after taking them into consideration, the revised buy-back regulations have been prepared, as per the official.

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First Published:17 Jun 2018, 12:08 PM IST
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