The Securities and Exchange Board of India (SEBI) on Tuesday accepted the Keki Mistry committee proposals towards gradually phasing out open market share buybacks by deciding to raise minimum utilisation requirements and creating a separate window for the same. SEBI decided to increase the minimum utilisation of the amount for buyback via stock exchanges to 75% vs 50%. It will also create a separate window on stock exchanges for share buyback. Buyback through the stock exchange route is to be phased out in a gradual manner. “We feel the tender route is the more equitable route to buyback. The other routes are vulnerable to favouritism,” said Madhabi Puri Buch, Chairperson, SEBI.
The capital markets regulator will amend its norms to facilitate sustainable finance and curb ‘greenwashing’. The SEBI’s board has approved measures to boost governance at stock exchanges and other market infrastructure institutions. SEBI has also accepted the recommendations of the working group on improving governance standards at exchanges – new rules include increased accountability of directors, stricter investment policy and data sharing. Separately, the board has decided to reduce the time taken for registration of FPIs to facilitate ease of doing business.
“Market Infrastructure Institutions (MII) act as the first level of the regulator and three roles of MIIs need to be delivered. The changes in MIIs will involve structure, code of conduct of KMPs and governance,” said Madhabi Puri Buch.
The Keki Mistry-headed committee earlier proposed changes like increasing the size of any buy-backs from 25% to 40% of the paid-up capital and free reserves of the company through a tender offer route. The committee also proposed reducing the cooling-off between buybacks. In a consultation paper, the committee had asked for wider powers for SEBI to levy penalties and take other disciplinary actions such as suspension of directors, members of statutory committees and key managerial personnel associated with MIIs for contravention of regulations.
