SEBI Seeks Public Feedback on Overhaul of Share Buyback Regulations

SEBI Proposes Sweeping Changes to India's Share Buyback Framework

The Securities and Exchange Board of India (SEBI) has proposed significant amendments to the country's share buyback framework, aimed at easing compliance and speeding up execution. The proposed changes, which are part of the 2018 buyback rules, come after open-market buybacks via stock exchanges were discontinued from April.

According to the proposed amendments, SEBI has suggested capping the duration of open-market buybacks at 66 working days. This move reverses earlier plans to allow offers to run as long as six months. Companies would still be required to deploy at least 40% of the earmarked buyback amount in the first half of the offer period.

The regulator has also proposed scrapping the need for a separate trading window for buybacks and allowing transactions to take place through the regular market. This change is expected to simplify the buyback process and reduce compliance costs for companies.

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SEBI has suggested making the appointment of a merchant banker optional for buybacks, shifting many procedural and compliance responsibilities directly to companies, stock exchanges, and auditors. This move is expected to reduce the burden on companies and promote greater transparency.

In addition to these proposals, SEBI has also suggested mandating companies to send an electronic intimation regarding the buyback offer to shareholders - as on the date of public announcement - within one working day of such announcement.

Other proposed changes include freezing promoters' shares during the buyback period to prevent trading and barring buybacks that would breach minimum public shareholding norms.

| Comparison of Proposed and Existing Buyback Rules | | --- | --- | | Existing Rules | Proposed Rules | | Duration of Open-Market Buybacks | Up to 6 months | Up to 66 working days | | Deployment of Buyback Amount | No specific requirement | At least 40% of earmarked amount in the first half of the offer period | | Trading Window | Separate trading window required | No separate trading window required | | Appointment of Merchant Banker | Required | Optional | | Intimation to Shareholders | No specific requirement | Electronic intimation within 1 working day of public announcement |

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