SEBI Brings Changes In Buyback Rules

SEBI: The Securities and Exchange Board of India has tweaked its SEBI Regulations 2018 rules on buyback of shares by companies.
Among the amendments, companies can now use 75 per cent of the proceeds of the buyback undertaken through the stock exchange route from the existing minimum of 50 per cent.

The SEBI has said the regulator has brought amendments to SEBI (Buy-back of Securities) Regulations, 2018, after considering the various suggestions received from stakeholders.

Some of the amendments brought in ware buyback done through stock exchanges route to be phased out in a gradual manner and increasing minimum utilization of the amount earmarked for buyback through stock exchange route from existing 50 per cent to 75 percent, according to a the regulator’s statement released on Tuesday.

Other two amendments are creation of a separate window on stock exchanges for undertaking buyback till the time buyback through stock exchange is permitted and buyback through tender offer route.

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

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

Further, the regulator has mandated market infrastructure institutions (MII) to create distinct verticals that will separate business development and risk management. The creation of these three verticals would enable keeping an arm’s length distance between critical operations, regulatory and compliance business and other functions such as business development.

SEBI also said that MIIs will be mandatorily required to appoint public interest directors with background and expertise in the areas of technology, law and regulatory, finance and accounts and capital markets. “The internal evaluation of functioning of MIIs and their statutory committees will be done every year. In addition, an external evaluation will be done by an independent entity once in three years,” the regulator said.