Who wrote this article?

Deepak Shenoy, Capitalmind's research team.

SEBI Ups Buyback Minimums to 50%

26 Jun 2013Deepak Shenoy1 min read

Quick Facts

What is "SEBI Ups Buyback Minimums to 50%" about?
What category is this article in?: Stocks
Who wrote this article?: Deepak Shenoy, Capitalmind's research team.
When was this article published?: Published 26 June 2013.
How long does this article take to read?: 1 min read
What topics does this article cover?: BuyBack

In my Demystifying Share Buybacks article, I had mentioned new reforms expected for share buybacks. SEBI has now fixed at least two of the problems I mentioned. From the SEBI meeting notes:

A company has to buyback at least 50% of what they say they’ll buy back. As I’d noted, stock buybacks have been proposed at huge numbers but promoters never bothered to actually buy stock, creating false expectations.
The buy-back must be finished in 6 months.
Companies must put 25% of the money required in an escrow account. SEBI will take 2.5% of the entire issue as a fine if the 50% buyback is not achieved.
No more raising further capital for 1 year, but existing obligations (like convertible debt) can be honoured. No further buybacks for a year either.
Buyback disclosures to be on a daily basis, comprehensively. Currently they need to report daily, fortnightly and monthly.
Anything more than 15% of capital needs a tender offer, not a market buyback.
**Promoters can’t buy or sell **during the buyback.

This helps streamline the buyback process and reduces abuse.