SEBI To Phase Out Buyback Through Stock Exchanges, Streamline Onboarding Process For FPIs

The board of capital markets regulator SEBI has decided to gradually phase out share buyback through stock exchange route.

Sebi on Tuesday approved amendment to its buyback regulations

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The Securities and Exchange Board of India (SEBI) on Tuesday announced changes in the share buyback norms for listed companies after considering the various suggestions received from stakeholders. This is being done in a bid to increase the transparency and credibility of markets.

The market regulator also announced streamlining of the onboarding process to facilitate ease of doing business and reducing the time taken for registration of Foreign Portfolio Investors (FPIs).

In a release posted after the scheduled board meeting on Tuesday, SEBI said, “Buyback through stock exchange route to be phase out in a gradual manner.”

The regulator said that now the firms will have to use 75 per cent of the proceeds of the buyback undertaken through the stock exchange route. This limit was 50 per cent previously.

SEBI said that it will create a separate window on stock exchanges for undertaking buyback till the time buyback through the stock exchange is permitted. India’s market regulator reduced the time a share buyback process is open from 90 days to 66 days. Earlier this year a panel under the chairmanship of Keki Mistry, vice chairman of HDFC Ltd, recommended these changes. 

SEBI is also streamlining the onboarding process to facilitate ease of doing business and reducing the time taken for registration of Foreign Portfolio Investors (FPIs).

In order to reduce the time taken for granting registration to FPIs, the board is going to grant registration on the basis of scanned copies of application forms/supporting documents and activation of trading post verification of physical documents. 

In Tuesday's meeting, the regulator mandated market infrastructure institutions (MII) to create distinct verticals to separate business development and risk management to keep an arm’s length distance between critical operations, regulatory and compliance business, and other functions such as business development.

These measures were recommended by a panel under the chairmanship of former whole-time member G Mahalingam.