SEBI Eases Buyback Rules For Companies With NBFC, Housing Finance Subsidiaries

The Securities and Exchange Board of India (SEBI) has eased its norms for share buyback by listed companies, especially those that have subsidiaries in housing finance and NBFC segments.

The notification comes as the SEBI board had approved norms in this regard in August. Repurchasing shares by listed companies is governed by the Buyback Regulations of SEBI as well as the Companies Act.

Among other conditions that the companies need to follow, the buyback offer cannot exceed 25 percent of the aggregate paid-up capital and free reserves of the company, but shareholders' approval is required through a special resolution in case the size exceeds 10 percent.

Further, 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.

With inputs from PTI