SEBI introduces additional restrictions for Companies undertaking buy-back via Stock Exchange Route

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  • Last Updated on 10 March, 2023

buy-back securities by companies

Circular No. SEBI/HO/CFD/PoD-2/P/CIR/2023/35, Dated March 08, 2023

The SEBI has notified SEBI (Buy-Back of Securities) (Amendment) Regulations, 2023. Some additional restrictions have been imposed on the placement of bids, price and volume for the companies undertaking buy-back through the stock exchange route.

Under these restrictions, a company shall not purchase more than 25% of average daily trading volume (in value) of its shares in the 10 trading days preceding the day in which such purchases are made.

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

Additionally, the company as well as its appointed broker must ensure compliance with the aforesaid provisions. The stock exchange shall monitor their compliance and in case of any instance of such non-compliance, shall impose appropriate fines and/or other enforcement actions as deem fit.

With regard to margin requirements for deposits in an escrow account, the escrow account should consist of cash and/or other than the cash. The portion of the 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 July 05, 2021, as amended from time to time.

Also, the merchant banker to buy-back offer is advised to ensure that the adequate amount after the applicable haircut is available in an escrow account till the completion of all formalities of the buy-back.

Click Here To Read The Full Circular

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