Buyback
SEBI tightens rules for buyback of shares through stock exchange route
Mumbai: The Securities Exchange Board of India has released a circular specifying restrictions on placements of bids, price, and volume for a company seeking to buy back its shares through the exchange route, media reports said.
In December, a significant regulation was introduced by the market regulator, which provided a plan for gradually eliminating share buybacks through the exchange route.
Currently, listed companies are allowed to can buy their shares via the tender offer route and buyback route.
As per the operational guidance circular issued by the regulator, a company, opting for buyback from the stock exchange route, cannot buy more than 25% of the average daily trading volume (by value) of its shares or other specified securities during the 10 trading days before the date of purchase.
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 has instructed the company and its chosen broker to ensure that these rules are followed, and stock exchanges have been tasked with monitoring compliance. If non-compliance is discovered, the exchanges have the authority to levy fines or take other enforcement measures as they see fit.
SEBI notified the Securities and Exchange Board of India (Buy-Back of Securities) (Amendment) Regulations,2023 on February 7, 2023.
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