Sebi to gradually phase out share buyback via stock exchange route

Market regulator Securities and Exchange Board of India's (Sebi) board took an array of decisions on Tuesday to boost governance at stock exchanges and other market infrastructure institutions.

Sebi on Tuesday said buybacks through stock exchanges would be phased out gradually. Sebi chief Madhabi Puri Buch said stock exchange route for share buyback is vulnerable to favouritism and that the Sebi board preferred tender offer route.

''This is a glide path and will lead to the phasing out of the present buyback mode (through stock exchange route),'' she told reporters in Mumbai. Currently, for share buyback, companies have both the options of stock exchange and tender offer.

Sebi also made it "mandatory to place the relevant advertisements/documents with respect to buyback, such as, copy of the public announcement, letter of offer etc. in the respective website of the stock exchange(s), merchant banker and the company for better dissemination of information to shareholders. These amendments aim to streamline the process of buy-back, create a level playing field for investors and promote ease of doing business".

Sebi also increased the minimum utilisation amount for buybacks through stock exchange to 75% from 50%.

Sebi also said in a statement that it would permit an upward revision of buyback price through tenders until one working day prior to the record date.

The timeline for completion of buybacks through tender offers has been reduced by 18 days, the statement added.

Sebi will also reduce time taken for registration of FPIs to facilitate ease of doing business.

The regulator said it will amend norms to facilitate sustainable finance in the country and curb 'greenwashing'.

The regulator also allowed certain alternative investment trusts to participate in credit default swaps as protection sellers.

It enhanced the scope of green debt securities to introduce sub-categories, such as blue bonds for water management and the marine sector and yellow bonds for solar energy.