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SEBI notified  the Securities  and  Exchange  Board  of  India (Buy-Back  of  Securities) (Amendment)   Regulations,2023 on 7 February 2023. The aforementioned amendment regulations shall come into force on 30th day of the date of notification. Accordingly, the  amendment regulations shall be made  effective for  all buy-back  offers where the Board of Directors of the company approve resolution with respect to Buy-back on or after 30th day of the date of notification of this amendment in the official gazette (i.e. 9 March 2023).

As per Clause (vi) of Regulation 16 of the Buy-back Regulations, the buy-back through stock  exchanges shall be subject  to  the  restrictions  on  placement  of  bids,  price  and volume, as specified by SEBI. In this regard, in consultation with the Stock Exchanges, the following restrictions have been set-out for the companies undertaking buy-back through stock exchange route:

  1. The company shall not purchase more than 25% of the average daily trading volume (in  value)  of  its shares  or  other  specified  securities  in the  ten  trading days preceding the day in which such purchases are made.
  2. The company shall  not place  bids  in  the  pre-open  market, first thirty minutes and the last thirty minutes of the regular trading session.
  3. The company’s purchase order price should be within the range of ±1%from the last traded price.

In this regard, the company as well as its appointed broker shall ensure the compliance with the aforesaid provisions. The Stock Exchange shall monitor their compliance and in case of any instance(s) of such non-compliance shall  impose appropriate  fines  and/or other enforcement actions as deem fit.

As per the sub-clause (c) of Clause (xi) of Regulation 9 and Clause (ii) of Regulation 20 of the Buy-back Regulations, the escrow account shall consist of cash and/or other than the cash. The  portion  of  escrow  account  in  the  form  of  other  than  the  cash  shall  be  subject  to appropriate haircut, in accordance with the SEBI Master Circular for Stock Exchange and Clearing Corporations dated 5 July 2021, as amended from time to time. Merchant Banker to buy-back offer is advised to ensure that the adequate amount after the applicable haircut is available in escrow account till the completion of all formalities of buy-back.

WRITTEN BY

For further information, please contact:

Vineet Aneja – Clasis Law,
vineet.aneja@clasislaw.com

Vineet heads Clasis Law and shares his time between the Delhi and Mumbai offices. He has extensive experience working with both Indian and foreign companies, as well as with government authorities.

Vineet’s corporate practice includes advising on mergers and acquisitions, joint ventures, private equity and investment funds on a full range of corporate clients on general corporate matters and in the areas of capital markets, project finance, regulatory and real estate.

Vineet’s skill set includes a deep transactional understanding as well as significant industry expertise across industries as diverse as manufacturing, media, medical devices, fashion, insurance, technology, telecommunications, infrastructure, hospitality, retail and financial services. Client feedback has highlighted the value his experience adds to both the legal and commercial sides of transactions.

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