SEBI RELAXATIONS IN BUY BACK REGULATIONS DUE TO COVID-19

SEBI Relaxations in BUy back regulations due to COVID-19

§  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/2020/69 issued and publish dated 23^rd  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.

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 year may 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: 31^st 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

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About Author:

 CS Lalit Rajput (PARTNER AT Xcede Consultech LLP) AND CAN BE REACHED AT consultech@xcede.in  / +91 8802581290