The Securities and Exchange Board of India (SEBI) has suggested additional measures for reintroducing open-market buybacks through stock exchanges. These measures include a shortened completion timeline and new safeguards for minority shareholders. Companies undertaking open-market buybacks must now complete the process within 66 working days from the offer opening, using at least 40% of the buyback size in the first half of the offer period. SEBI stated that recent changes in the Companies Act necessitate this 66-day timeline to maintain a balanced approach.
SEBI may direct the freezing of shares and specified securities held by promoters and their associates at the ISIN level during the buyback period as an additional safeguard. The regulator also proposed eliminating the need for a separate trading window for buyback transactions, suggesting that these trades be conducted through the normal market mechanism. Furthermore, SEBI suggested removing the requirement to display the company’s identity as a purchaser on the trading screen.
To ensure compliance with minimum public shareholding norms, SEBI proposed introducing an explicit provision and aligning the interval between two buyback offers with the Companies Act, 2013. Additionally, companies may soon be required to inform shareholders electronically about buyback offers within one working day of the public announcement.
