SEBI has approved systematic phasing out of open market buybacks. Open market buybacks will be completely phased out from April 1, 2025. Till then open market through stock exchanges, based on the standalone or consolidated financial statements of the company, whichever sets out a lower amount, shall be less than: —
fifteen per cent of the paid up capital and free reserves of the company till March 31, 2023;
ten per cent of the paid up capital and free reserves of the company till March 31, 2024;
five per cent of the paid up capital and free reserves of the company till March 31, 2025
Other amendments – Open market buy backs: –
SEBI has now prescribed that atleast 40% of amount earmarked for buyback be utilized within initial half of financial year. Also, it has stated that min. 75% of amount earmarked for open market buyback shall be utilized as against 50% earlier.
SEBI has also stated that a separate window shall be created by the concerned stock exchange for open market buyback. SEBI has further tried to streamline buyback through stock exchanges by putting restrictions on the placement of bids, price and volume of trade.
SEBI has also curtailed timelines for periods of tendering for open market buybacks:
The buy-back offer shall open not later than four working days from the record date and shall close: –
a. within six months, if the buy-back offer is opened on or before March 31, 2023;
b. within 66 working days, if the buy-back offer is opened on or after April 1, 2023 and till March 31, 2024; and
c. within 22 working days, if the buy-back offer is opened on or after April 1, 2024 and till March 31, 2025:
Provided that with effect from April 1, 2025, the option of open market buy-back through the stock exchange shall not be available to any company except in cases where the buyback offer has opened on or before Mach 31, 2025.
Buyback through the stock exchange route would now be restricted only to companies whose shares are frequently traded. Also, SEBI has introduced the definition of frequently traded shares