SEBI relaxations in buy back regulations due to COVID-19



Quick Summary
The Securities and Exchange Board of India (SEBI) introduced temporary relaxations to its Buy-back of Securities Regulations, 2018, in response to the COVID-19 pandemic. Specifically, Regulation 24(i)(f), which previously restricted companies from raising further capital for one year after a buy-back, has been amended. This period has been reduced to six months, aligning it with the Companies Act, 2013, and providing companies with more flexibility during the pandemic. This relaxation was effective immediately and concluded on 31st December 2020.

Relaxation in Regulation 24(i)(f) of the SEBI (Buy-back of Securities) Regulations, 2018 due to the COVID 19 pandemic

Overview

Securities and Exchange Board of India (SEBI) vide notification / Circular No. SEBI/HO/CFD/DCR2/CIR/P/2020/69issued and publish dated 23rd April, 2020, has published Relaxation in Regulation 24(i)(f) of the SEBI (Buy-back of Securities) Regulations, 2018 due to the COVID 19 pandemic"in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992.

SEBI Buy-Back Rules Relaxed Due to COVID-19

The Circular has been issued to:

  • All Listed Entities
  • All Recognized Stock Exchanges
  • All Registered Merchant Bankers

Key Highlights:

• SEBI has received a number of suggestions for relaxation of conditions with respect to raising of funds from the securities market.

• Regulation 24(i)(f) of SEBI (Buy-back of Securities) Regulations, 2018 ("Buyback Regulations") Provides a restriction that

The companies shall not raise further capital for a period of one year from the expiry of buyback period, except in discharge of their subsisting obligations. It has been represented that the said period of one yearmay be reduced to six months, which would be in line with section 68(8) of the Companies Act, 2013.

Relaxation Provided:

it has been decided to temporarily relax the period of restriction provided in Regulation 24(i)(f) of the Buy-back Regulations. Accordingly the words "one year" shall be read as "six months" in the said regulation

Comparative Analysis of Regulation 24(i) (f) of SEBI (Buy-back of Securities) Regulations, 2018:

   

Before Amendment

After Amendment

The companies shall not raise further capital for a period of one year from the expiry of buyback period, except in discharge of their subsisting obligations

The companies shall not raise further capital for a period of Six Months from the expiry of buyback period, except in discharge of their subsisting obligations

Applicability of the Circular / said relaxation:

• Started from :Immediate effect
• Ended on: 31st Day of December, 2020.

Kindly note :

• The stock exchanges are advised to bring the provisions of this circular to the notice of all the stakeholders including the listed entities and
• Also disseminate on their websites.

Source: https://www.sebi.gov.in/legal/circulars/apr-2020/relaxation-in-regulation-24-i-f-of-the-sebi-buy-back-of-securities-regulations-2018-due-to-the-covid-19-pandemic_46547.html

Disclaimer: IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE USE OF THIS INFORMATION.




About the Author

Company Secretary

Company Secretary having 11+ years of post qualification experience in the Compliance Management Services industry by serving Corporates including Listed Companies, Corporate Secretarial Firms and LLP. Have a keen interest in the Corporate Governance and Compliance Management and the soaring craving to learn everyday. ... Read more

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