Sebi eases buyback norms for firms with HFC, NBFC units
MUMBAI: Capital markets regulator Securities and Exchange Board of India (Sebi) on Wednesday announced easing of its norms for buyback of shares by listed companies, especially those having subsidiaries in housing finance and non-banking finance companies (NBFC) sectors.
A proposal in this regard was approved by Sebi’s board at its meeting here. The repurchase of shares by listed companies is governed by the Buyback Regulations of Sebi as well as the Companies Act.
Among the main conditions that the companies need to follow, the buyback offer cannot exceed 25% 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%.
Sebi’s proposal to amend its regulations also follow a notification by the corporate affairs ministry permitting government companies carrying out non-banking finance and housing finance activities to launch buybacks resulting in up to 6:1 debt to equity ratio post the share repurchase.
After taking into account the feedback to a public consultation process launched in May, Sebi has now proposed to continue with the current approach of allowing buybacks resulting in post-buyback debt-to-equity ratio of up to 2:1, except for companies for which a higher ratio has been notified under the Companies Act, based on both standalone and consolidated basis.