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Business News/ Markets / Stock Markets/  Share buybacks through stock exchanges to be phased out under new Sebi rules
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Share buybacks through stock exchanges to be phased out under new Sebi rules

Minimum utilisation of amount for buyback through stock exchange has been increased to 75% from 50% currently

Mumbai: SEBI Chairperson Madhabi Puri Buch. (PTI)Premium
Mumbai: SEBI Chairperson Madhabi Puri Buch. (PTI)

The board of capital markets regulator Sebi on Tuesday approved amendment to its buyback regulations and has decided to gradually phase out share buyback through stock exchange route. Until then, a separate window will be created on the stock exchanges to conduct such repurchases.

At present, for share buyback, companies have both the options of stock exchange and tender offer.

Minimum utilisation of amount for buyback through stock exchange has been increased to 75% from 50% currently.

These were among the proposals approved by Sebi board during its meeting today. At a subsequent briefing, Sebi Chairperson Madhabi Puri Buch said, “Changes will create a level playing field for all investors."

The Securities and Exchange Board of India (SEBI) will amend its norms to facilitate sustainable finance and curb 'greenwashing'. It has approved measures to boost governance at stock exchanges and other market infrastructure institutions.

The Sebi Chairperson said the stock exchange route for share buyback is vulnerable to favouritism. The capital markets regulator said that it would permit an upward revision of buyback price through tenders until one working day prior to the record date.

The timeline for completion of buybacks through tender offers has been reduced by 18 days, Sebi said.

Sebi has also accepted the recommendations of working group on improving governance standards at exchanges – new rules include increased accountability of directors, stricter investment policy and data sharing.

Shareholder protection is sharply in focus in India after a spate of frauds surrounding the NSE and MCX and flop IPOs eroded returns for minority holders.

 Sebi has also green light proposal for Execution Only Platforms for direct plans of Mutual Fund schemes. 

The new rules will make it convenient for investors to make investments via EOPs. It will have investor protection mechanism, cyber security requirements, pricing of services and grievance redressal.

The capital markets regulator will also reduce time taken for registration of FPIs to facilitate ease of doing business.

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ABOUT THE AUTHOR
Meghna Sen
Business journalist tracking markets, companies, economy and crypto for Livemint. She has 6 years of experience with online and print publications. Email: meghnasen08@gmail.com
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Published: 20 Dec 2022, 05:39 PM IST
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