On 20th Dec 2022, the proposed amendments to the SEBI Buy-back of Securities Regulations, 2018, including a number of changes to the buyback process in India.
These changes are intended to streamline the buyback process, create a level playing field for investors, and promote ease of doing business. It is important for companies to carefully consider the implications of buyback, as it can affect the company’s capital structure and shareholder value. Companies should also ensure compliance with relevant regulations and laws when conducting a buyback.
Amendments Proposed by SEBI for Buy-back of Securities
- Phasing out the buyback through the stock exchange route in a gradual manner.
- Increasing the minimum utilization of the amount earmarked for buyback through the stock exchange route from 50% to 75%.
- Creating a separate window on stock exchanges for undertaking buybacks until buyback through the stock exchange is permitted.
Buy-back of Securities Through Tender Offer Route
- Reducing the timeline for completion of the buyback by 18 days.
- Allowing for upward revision of the buyback price until one working day prior to the record date.
- Making it mandatory to place relevant advertisements and documents related to the buyback on the websites of the stock exchange, merchant banker, and the company.