SEBI issued the amended regulations of the SEBI (Buy-back of Securities)
Regulations, 1998 and recently Rajya Sabha approved of the Companies
Bill, 2013. In view of these two recent important developments, the
SEBI's earlier regulation for buy-back of securities has been compared
with the new regulations and the
provisions of the Companies Bill, 2013.
Point of Distinction SEBI - Earlier Position SEBI - Position as of now Clause 68 of Companies Bill, 2013
General Conditions
Limit on buy-back of securities No limit was prescribed Less than 15% of the paid up capital and free reserves The buy-back of securities shall be limited to 25% of total paid-up capital and free reserves. Provided that in case of buy-back of equity shares it is 25% of total paid-up equity capital in a financial year
Restrictive period on further buy-back No minimum time period was prescribed between two buy-backs The company shall not make another offer of buy-back within 1 year from the date of closure of preceding offer of buy-back. No offer of buy-back shall be made within a period of one year from the date of closure of preceding offer of buy-back.
Minimum buy-back No such condition 50 % of the amount earmarked for buy-back should be utilized for buying back of shares. No such condition
Buy-back from the open market through Stock Exchange
Date of public announcement The public announcement had to be made at least seven days prior to the commencement of buy-back The public announcement shall be made within seven working days from the date of passing of resolution authorising buy-back No such condition
Filing of copy of public announcement with the board Within two days of such announcement Simultaneous with the issue of such public announcement No such condition
Dissemination of information of buy-back Submission of information of buy-back on daily basis to Stock Exchange and publishing of same in a national daily on a fortnightly basis Submission of information of buy-back to stock exchange on a daily basis and Stock Exchange shall upload the same on its official Website No such condition
Information of buy-back on the official Website of Company Not prescribed To be uploaded by company on its official Website on a daily basis No such condition
Period of buyback offer Not prescribed Shall not open later than 7 working days from the date of public announcement and shall close within 6 months from the date of opening of offer The buy-back shall be completed within a period of one year from the date of passing of resolution authorising buyback.
Buy-back of physical shares Not prescribed New Regulation 15A inserted No such condition
Provisions regarding escrow account Not prescribed New Regulation 15B inserted No such condition
Extinguishment of certificates Securities bought back during the month on or before the fifteenth day of the succeeding month. Within 7 days of the last date of completion of buy-back
Obligations
Restriction on promoters for dealing in shares Restriction during period of open offer on dealing in shares in Stock Exchange Restriction both on dealing in shares in Stock Exchange and off market during the period of passing of resolution till closure of buy-back, including interse transfer No such condition
Restriction on further raising of capital Not prescribed One year from the closure of buy-back offer, except in discharge of its subsisting obligation. 6 months, except by way of bonus issue or in discharge of its subsisting obligation.
provisions of the Companies Bill, 2013.
Point of Distinction SEBI - Earlier Position SEBI - Position as of now Clause 68 of Companies Bill, 2013
General Conditions
Limit on buy-back of securities No limit was prescribed Less than 15% of the paid up capital and free reserves The buy-back of securities shall be limited to 25% of total paid-up capital and free reserves. Provided that in case of buy-back of equity shares it is 25% of total paid-up equity capital in a financial year
Restrictive period on further buy-back No minimum time period was prescribed between two buy-backs The company shall not make another offer of buy-back within 1 year from the date of closure of preceding offer of buy-back. No offer of buy-back shall be made within a period of one year from the date of closure of preceding offer of buy-back.
Minimum buy-back No such condition 50 % of the amount earmarked for buy-back should be utilized for buying back of shares. No such condition
Buy-back from the open market through Stock Exchange
Date of public announcement The public announcement had to be made at least seven days prior to the commencement of buy-back The public announcement shall be made within seven working days from the date of passing of resolution authorising buy-back No such condition
Filing of copy of public announcement with the board Within two days of such announcement Simultaneous with the issue of such public announcement No such condition
Dissemination of information of buy-back Submission of information of buy-back on daily basis to Stock Exchange and publishing of same in a national daily on a fortnightly basis Submission of information of buy-back to stock exchange on a daily basis and Stock Exchange shall upload the same on its official Website No such condition
Information of buy-back on the official Website of Company Not prescribed To be uploaded by company on its official Website on a daily basis No such condition
Period of buyback offer Not prescribed Shall not open later than 7 working days from the date of public announcement and shall close within 6 months from the date of opening of offer The buy-back shall be completed within a period of one year from the date of passing of resolution authorising buyback.
Buy-back of physical shares Not prescribed New Regulation 15A inserted No such condition
Provisions regarding escrow account Not prescribed New Regulation 15B inserted No such condition
Extinguishment of certificates Securities bought back during the month on or before the fifteenth day of the succeeding month. Within 7 days of the last date of completion of buy-back
Obligations
Restriction on promoters for dealing in shares Restriction during period of open offer on dealing in shares in Stock Exchange Restriction both on dealing in shares in Stock Exchange and off market during the period of passing of resolution till closure of buy-back, including interse transfer No such condition
Restriction on further raising of capital Not prescribed One year from the closure of buy-back offer, except in discharge of its subsisting obligation. 6 months, except by way of bonus issue or in discharge of its subsisting obligation.
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