The SEBI headquarters in Mumbai, India. (Photographer: Santosh Verma)

SEBI Set To Amend Buyback Regulations

Markets regulator SEBI plans to revise the regulations for share buybacks 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 buyback norms 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 buyback period and clarity on the requirement to make public announcement for buyback 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 buybacks is likely to be discussed during the SEBI’s board meeting on June 21, the official said.

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According to the official, the buyback period would be defined as the time between date of authorisation for buyback 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 about filing requirements and time for public announcements. The official said that a company, that has been authorised to do the buyback 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 buyback of shares out of its free reserves and securities premium account, among others. However, buybacks cannot be made from 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 buyback regulations.

Earlier this year, a discussion paper on new buyback 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 buyback regulations have been prepared, as per the official.

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