SEBI tightens norms for buybacks through stock exchange route

On Feb 11, the Sebi had invited applications from eligible firms for empanelment of forensic auditors for MFs, their AMCs and trustee companies.

The Securities and Exchange Board of India (SEBI) on March 8 released a circular chalking out restrictions on placements of bids, price and volume for a company seeking to buy back its shares through the exchange route.

Earlier in December, the market regulator unveiled a momentous regulation that laid down the blueprint for a gradual phasing out of share buybacks through the exchange route.

At present, a company can exercise the tender offer route and the buyback route to buy its shares listed on the bourses.

As far as buyback from the stock exchange route is concerned, the regulator, in an operational guidance circular, has mandated that no company shall purchase more than 25 percent of the average daily trading volume (in value) of its shares or other specified securities in the 10 trading days preceding the day on which such purchases are made.

Also read: Sebi gives till March-end to file for empanelment of forensic auditors at MFs, AMCs, trustees

The company shall not place bids in the pre-open market, that is, the first 30 minutes and the last 30 minutes of a regular trading session. The company’s purchase order price should be within the range of ±1%from the last traded price, it has said.

The regulator also directed that the company and its appointed broker shall ensure compliance with these provisions. Stock exchanges have also been mandated to monitor compliance and in case non-compliance comes to the fore, the exchanges will have the liberty to impose appropriate fines or take other enforcement actions as they deem fit.

SEBI notified the Securities and Exchange Board of India (Buy-Back of Securities) (Amendment) Regulations,2023 on February 7, 2023.