Sebi Chairperson Madhabi Puri
Synopsis
The decision for the same is based on the recommendations in the Keki Mistry report, which suggested phasing out share buybacks from the open market through stock exchanges as these are prone to misuse.
With an aim to create a level-playing field for investors, the Securities and Exchange Board of India (Sebi) has decided to phase out the mechanism of buying back shares by companies through the open market route in a gradual manner.
This is following the recommendations made in the Keki Mistry report, which suggested that open market share buy backs are prone to misuse and should, therefore, be phased out. The decision was part of the several major measures taken by the capital market regulator at the board meet today.
Further, SEBI increased the minimum utilisation of the amount set aside by companies for buyback through the open market route to 75% from 50%. The timeline to complete the buyback through the tender offer route has been reduced by 18 days by doing away with the norm of filing draft letter of offer with Sebi for the same.
The market regulator has also permitted companies to make upward revision to buyback price until one working day prior to the record date.
Sebi Chairperson Madhabi Puri Buch said the regulator has chosen the tender offer route for share buyback as the present mode is vulnerable to favouritism.
"This is a glide path and will lead to the phasing out of the present buyback mode (through stock exchange route)," she told reporters.
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