SEBI proposes changes to buyback principles

November 17, 2022

The Securities and Exchange Board of India (Sebi), on Wednesday, floated a discussion paper proposing to revamp the share buyback process. The new frame proposes to cut the time period taken for completion of buybacks, enhance the quantum companies can rescue vis- à- vis their free reserves and reduce the cooling-off period between two buybacks.

presently, companies can buyback only 25 per cent of the paid- up capital and free reserves under the tender route. Sebi has proposed an increase in it to 40 per cent. The move will help companies return a lesser quantum to shareholders in the form of buyback. Further, the commission has suggested that companies should be allowed to take over two buybacks during a 12- month period as opposed to just one at present. also, it has been proposed to reduce the time period of buyback, from the current six months, to 66 working days from

April 2023.

“This may affect in artificial demand being created for the applicable company’s shares during such an extended period of time and trading of shares being at an inflated price,” the Sebi commission noted. The controller has also specified adding the minimal threshold for buybacks through the open request route to 75 per cent from the current 50 per cent. This is the threshold that companies have to mandatorily use from the quantum allocated for steal- reverse.

The offer aims to help companies from publicizing buy- tails in cases where there’s no real intention to complete the steal- reverse for the entire quantum blazoned. The recommendations are grounded on a sub-group setup by Sebi under the chairmanship of KK Mistry, Vice Chairman & CEO, HDFC. Sebi has invited commentary on the discussion paper from the public by December 1.

About SEBI (Securities and Exchange Board of India)


Establishment Of SEBI

The Securities and Exchange Board of India was constituted as a non-statutory body on April 12, 1988 through a resolution of the Government of India. The Securities and Exchange Board of India was established as a statutory body in the year 1992 and the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) came into force on January 30, 1992.


The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as “…to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”