New Delhi: The Securities and Exchange Board of India (Sebi) on Tuesday said it will gradually phase out buyback of shares by companies through the stock exchange route.
SEBI Chairman Madhabi Puri Book Said that the regulator has chosen the tender offer route for share buyback as the current mode is vulnerable to favoritism.
Currently, companies have both stock exchange and tender offer options.
This means that buybacks from the open market will be phased out and till then a separate window will be created in the stock exchanges to do such buybacks.
“The changes will create a level playing field for all investors,” Buch later told a briefing.
In an official statement, SEBI increased the minimum utilization amount for buyback through stock exchange from 50% to 75%.
It has also allowed upward revision of buy back price up to 1 working day before the record date.
The markets regulator also approved steps to boost governance in stock exchanges and other market infrastructure institutions.
“These amendments are aimed at streamlining the process of buy-backs, creating a level-playing field for investors and promoting ease of doing business,” the statement said.
Strengthens governance norms for stock exchanges
SEBI also decided to amend governance norms for stock exchanges and market infrastructure institutions, including categorizing their operations into three verticals and rationalizing the appointment process for public interest directors.
The changes approved by the Board have been finalized after a comprehensive review of MIIs – governance of stock exchanges, clearing corporations and depositories.
Going forward, the functions of MII will be classified into three verticals – critical operations, regulatory, compliance and risk management, and business development, among others.
The Key Management Personnel (KMPs) heading the functions under the first two verticals will be at par with the KMPs leading the third vertical in the hierarchy. Also, the MII has to give high priority to resource allocation to the tasks under the first two verticals.
In a release, SEBI said that MIIs would be required to mandatorily appoint Public Interest Directors (PIDs), who have background and expertise in the areas of technology, law and regulation, finance and accounts and capital markets.
The PIDs will continue to meet every six months and apart from submitting a report to the Board of MII, they will be required to submit a report to SEBI after the meeting.
(with inputs from agencies)
SEBI Chairman Madhabi Puri Book Said that the regulator has chosen the tender offer route for share buyback as the current mode is vulnerable to favoritism.
Currently, companies have both stock exchange and tender offer options.
This means that buybacks from the open market will be phased out and till then a separate window will be created in the stock exchanges to do such buybacks.
“The changes will create a level playing field for all investors,” Buch later told a briefing.
In an official statement, SEBI increased the minimum utilization amount for buyback through stock exchange from 50% to 75%.
It has also allowed upward revision of buy back price up to 1 working day before the record date.
The markets regulator also approved steps to boost governance in stock exchanges and other market infrastructure institutions.
“These amendments are aimed at streamlining the process of buy-backs, creating a level-playing field for investors and promoting ease of doing business,” the statement said.
Strengthens governance norms for stock exchanges
SEBI also decided to amend governance norms for stock exchanges and market infrastructure institutions, including categorizing their operations into three verticals and rationalizing the appointment process for public interest directors.
The changes approved by the Board have been finalized after a comprehensive review of MIIs – governance of stock exchanges, clearing corporations and depositories.
Going forward, the functions of MII will be classified into three verticals – critical operations, regulatory, compliance and risk management, and business development, among others.
The Key Management Personnel (KMPs) heading the functions under the first two verticals will be at par with the KMPs leading the third vertical in the hierarchy. Also, the MII has to give high priority to resource allocation to the tasks under the first two verticals.
In a release, SEBI said that MIIs would be required to mandatorily appoint Public Interest Directors (PIDs), who have background and expertise in the areas of technology, law and regulation, finance and accounts and capital markets.
The PIDs will continue to meet every six months and apart from submitting a report to the Board of MII, they will be required to submit a report to SEBI after the meeting.
(with inputs from agencies)