Companies’ buyback rules are changed by SEBI

The Securities and Exchange Board of India (SEBI) has modified the guidelines in the SEBI Regulations 2018 regarding share buybacks by corporations.

 

Companies can now spend a minimum of 75% of the revenues from stock buybacks conducted via the stock market channel, up from the previous minimum of 50%.

 

According to the Sebi, the regulator revised the 2018 SEBI (Buy-back of Securities) Regulations after taking into account the numerous proposals received from stakeholders.

 

According to a statement from the regulator, modifications included raising the minimum use of funds set aside for buybacks through stock exchange routes from the current 50% to 75% and gradually phased-out buybacks through stock exchange routes.

 

The creation of a separate window on stock exchanges for conducting buybacks until buybacks through stock exchanges are permitted and buyback via tender offer method are the other two revisions.

 

SEBI informed that, the time frame for finishing buybacks through tender offers has been shortened by 18 days. The recommendations of the working group on enhancing exchange governance standards have also been adopted by Sebi; the new regulations include stricter investment guidelines, more director accountability, and data sharing.