India’s capital markets regulator the Securities and Exchange Board of India (Sebi) has proposed wide-ranging changes to the share buyback framework, including reintroducing open-market buybacks through stock exchanges, shortening execution timelines and easing compliance requirements for listed companies.
Under the proposed amendments to the 2018 buyback regulations, Sebi has suggested allowing companies to once again undertake open-market buybacks via stock exchanges, a mechanism that was discontinued from April this year.
The regulator has proposed capping the duration of such buybacks at 66 working days, reversing its earlier proposal that would have allowed buyback offers to remain open for up to six months.
Companies undertaking buybacks would still need to utilise at least 40 percent of the earmarked amount within the first half of the offer period.
Sebi has also proposed removing the requirement for a separate trading window for buyback transactions, allowing purchases to happen directly through the regular market mechanism.
In another significant relaxation, the regulator suggested making the appointment of a merchant banker optional for buybacks. Several procedural and compliance-related responsibilities would instead shift directly to companies, stock exchanges and auditors.
The regulator has further proposed that companies should electronically notify shareholders about the buyback within one working day of the public announcement.
Among other changes, Sebi has recommended freezing promoter shareholding during the buyback period to prevent trading activity and restricting buybacks that could lead to a breach of minimum public shareholding norms. |
