Sebi plans to tighten buyback norms

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Sebi plans to tighten buyback norms
The market regulator Sebi is now planning to tighten the buyback norms for Indian companies and may introduce such measures as the firm will have to buy back at least 50 per cent of the proposed offer and upon failing to do so, it may have to forfeit 2.5 per cent of the money earmarked for the buyback.

The move comes on the backdrop of reports that some companies refrained from buying a single share despite the buyback offer being open for an entire year and also they placed buy orders at their discretion. Sebi also observed that companies were not placing orders on regular basis and prices were usually fixed at a level away from market price.

So, Sebi has decided to introduce such measures which will make sure that only those companies which seriously plan to buy back shares come up in market. It may involve asking the companies to put 25% of the total proposed amount for buyback in an escrow account and to complete their buyback offer in six months as against the existing one-year period, said a media report.

Analysts said that it would be good for investors too as it will discourage companies who announce buy back just for public posturing.

Read more about: sebi
Story first published: Friday, June 21, 2013, 9:30 [IST]
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