SEBI’s nod for share buyback via tender offer, stock exchange route to be phased out

The Securities and Exchange Board of India (SEBI) agreed to phase out gradually the buyback of shares of companies via the stock exchange route in its board meeting on Tuesday. The market regulator also approved steps to boost governance at stock exchanges as well as other market infrastructure institutions.

Addressing a press conference after the meeting, SEBI Chairperson Madhabi Puri Buch said that the regulator chose the tender offer route for the buyback of shares as the current mode was vulnerable to favouritism. “This is a glide path and will lead to the phasing out of the present buyback mode (through stock exchange route),” Ms Buch said.

At present, companies have both options – stock exchange as well as tender offer – for share buyback.

She said that there were certain changes under the buyback via the tender route that required the approval of the Ministry of Corporate Affairs. She added that share buyback via the tender route offered a level-playing field.

Stock exchanges could increase trading hours if they wanted as there was no restriction from the SEBI if exchanges wanted to increase trading hours, Ms Buch added.

Besides, the SEBI board also decided to lessen the time taken for foreign portfolio investors’ (FPIs) registration to facilitate ease of doing business.

Talking about IPOs getting delayed, Ms Buch said that the SEBI could not be the reason for that. “I have been a merchant banker myself, and therefore, I understand that timing is everything. And for a client, when they want to raise capital, if for any reason the timing is missed, it is a very, very serious issue. And it is our desire that service should never be the reason why the client misses timing,” she said.

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