The Securities and Exchange Board of India ( SEBI ) recently through notification No. SEBI/LAD-NRO/GN/2024/210. notified second amendment on Securities And Exchange Board Of India (Buy-Back Of Securities) (Second Amendment) Regulations, 2024
The board made certain changes to the regulations to further amend the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018.
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In the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018, in regulation 4, sub-regulation (ii), – 1. in clause (a), the words “sets out a lower amount” appearing after the words and symbol “statements of the company, whichever” and before the symbol “:”, shall be substituted by the words “is lower”;
Further in clause (b), the words “sets out a lower amount” appearing after the words and symbol “statements of the company, whichever” and before the words and symbol “, after excluding financial statements”, shall be substituted by the words “is lower”;
Also in sub-regulation (iv), in clause (a), the symbol “;” appearing after the words “tender offer” shall be substituted by the symbol “:”. After the existing clause, the new proviso shall be inserted, as “Provided that in case any member of the promoter / promoter group has declared its intention to not participate in the buy-back, the shares held by such member of the promoter / promoter group shall not be considered for computing the entitlement ratio.”
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It was also notified that in regulation 17, in sub-regulation (ii), the words “record date” shall be substituted by the words “date of public announcement”;
In regulation 24, in sub-regulation (i), in clause (b), after the words “made under these regulations” and before the symbol “;”, the symbol and words “, except in discharge of subsisting obligations through conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares” shall be inserted. Further the symbol “;” shall be substituted with the symbol “:”. And after the existing clause, the following new proviso shall be inserted, namely,-
“Provided that the relevant details and the potential impact of such subsisting obligations, if any, shall be disclosed in the public announcement.”
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As per the amendment, in Schedule II, in the table, in the column titled “content”, after item (ii), the following new item shall be inserted, namely,- “(iii) Disclosures of the relevant details and the potential impact of subsisting obligations, if any, shall be made.” And in Schedule III, in the table, in the column titled “content”, after item (iii) of the existing paragraph, the following new paragraph shall be inserted, namely,- “Further, the cover page of the Letter of Offer should explicitly cover following details-
i. the entitlement ratio for small and general shareholders;
ii. web-link to website of the Registrar and Share Transfer Agent for shareholders to check their entitlement under the buyback.”
Finally as per the amendment, in the column titled “content”, in the existing item (iii),-
i.in sub-item (xvii), the symbol “.” appearing after the words “time to time” shall be substituted with the symbol “;”; in Schedule IV, in the table. And after sub-item (xvii), the following new sub-item shall be inserted, “(xviii) The relevant details and the potential impact of subsisting obligations, if any.”
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The notification was meant to further streamline the process of buy-backs and enhance transparency and efficiency in the market. Buy-back regulations govern the repurchase of shares or other securities by companies, often aimed at returning surplus funds to shareholders or improving financial metrics.
The second amendment to the regulation focused on aligning buy back schemes with global standards, and addressed concerns related to transparency, investor protection, and corporate governance.
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