Sebi looks to simplify language; remove inconsistencies.
New Delhi : Markets regulator Sebi plans to revise the regulations for share buybacks wherein more clarity would be provided on various aspects, including on the requirement to make public announcements, according to a senior official.
The watchdog has carried out a review of the current buyback norms in order to simplify the language, remove inconsistencies and update the references to the new Companies Act that came into force in April 2014.
The official said definition of buyback period and clarity on the requirement to make public announcement for buyback offer after declaration of postal ballot results would be provided in the amended regulations. Besides, explanation for ‘free reserves’ in line with Companies Act, 2013 would be part of the new framework.
The revised framework for share buybacks is likely to be discussed during the Sebi’s board meeting on June 21, the official said.
According to the official, said ‘buyback period’ would be defined as the time between date of authorisation for buyback by a company’s board of directors and the date on which the payment is made to shareholders who have accepted the offer.
Another proposed change is with regard to filing requirements and time for public announcements.
The official said that a company, that has been authorised to do the buyback of shares, should make a public announcement within two working days of its declaration. Two days would be from the “date of declaration of results of the postal ballot for special resolution/board of directors”, the official added. A company can undertake a buyback of shares out of its free reserves and securities premium account, among others.
However, buybacks cannot be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities. Free reserves include securities premium account.
The official also said that clarity would be provided on timelines with respect to various requirements under buyback regulations.
Earlier , a discussion paper on new buyback regulations was issued in March this year. Over 150 comments were received from various entities on the discussion paper and after taking them into consideration, the revised buyback regulations have been prepared.
14,720 firms under I-T, MCA lens over non-genuine trades
New Delhi: Continuing with efforts to crack down on illegal trading activities, market regulator Sebi has shared its findings about 14,720 entities that indulged in non-genuine trades through illiquid stock options with the Income Tax Department and the Ministry of Corporate Affairs, according to an official. The markets regulator came across violations by 14,720 entities while it was probing 59 entities in a case related to alleged trading irregularities in stock options segment of BSE. The 59 entities were probed to check whether they violated norms pertaining to fraudulent trade activities during the period from April 1, 2014 to March 31, 2015. Later, the scope of investigation was expanded to cover all the entities that had indulged in executing reversal trades in BSE’s stock options segment and the time period was also extended to September 30, 2015. The findings of the probe, relating to profits and losses incurred by the 14,720 entities have been shared with various authorities, the official said. The details have been shared with the Income Tax Department, the Enforcement Directorate, the Ministry of Corporate Affairs (MCA) and the Financial Intelligence Unit. The matter is likely to be discussed at Sebi’s board meeting scheduled for June 21. Out of the 21,600 entities that had traded on the BSE’s stock options segment during April 1, 2014 to September 30, 2015, Sebi found that as many as 14,720 entities were involved in “generation of artificial volumes” by executing non-genuine and reversal trades, as per the official.
