The Capital markets regulator of SEBI is planning to ease its norms for buyback of shares by listed companies. This facility is especially those having subsidiaries in housing finance and NBFC sectors.
According to top officials, the proposal is expected to be discussed by SEBI’s Board in this meeting to be held within a week. As per the regulation of the Securities and Exchange Board of India (SEBI) and Companies Act 2013, the repurchase of shares of listed companies is governed by the Buyback Regulations.
As per the SEBI Regulation, the buyback offer cannot exceed 25% of the aggregate paid-up capital and free reserves of the company, but shareholders’ approval is required through a special resolution in case of the size exceeding 10%.
Also, a buyback is permitted only if the ratio of the aggregate of secured and unsecured debts owed by the company after the buyback is not more than twice the paid-up capital and free reserves unless a higher debt-to-equity ratio is specified under the Companies Act.