UNIT III - SEBI (Buy-Back of Securities) Regulations, 2018

Meaning of Buy-back
The term buy-back implies the act of purchasing its own shares/securities by a company. This facility
enables the Company to go back to the holders of its own shares/securities and make an offer to purchase
such shares/ securities from them.
The corporates adopts various tools, viz., mergers, amalgamations and takeovers for restructuring the
business. All these activities, in turn, impacts the functioning of the capital market, more particularly the
movement of share prices. As the shares of companies are held by different segments of society, viz.,
entrepreneurs, Body Corporates, institutional investors and individual shareholders including small
investors, it is reasonable that there should be equality of treatment and opportunities to all shareholders,
transparency, proper disclosure and above all protection of interests of small and minority shareholders.
Similarly, buy-back of securities is a corporate financial Strategy which involves repurchase of its
outstanding shares by a company.

There are generally two ways a company can return cash to its shareholders –
• Declaration of dividend or
• Through buy-back of shares.

A buy-back represent a more flexible way of returning surplus cash to its shareholders as it is governed
by a process laid down by law, it is carried out through the stock exchange mechanism and is more tax
efficient as it does not involve the company to make payment of dividend distribution tax and it has the
benefits of long-term capital gains.
Buy-back leads to reduction in outstanding number of equity shares, which may lead to improvement
in earnings per equity share and enhance return on net worth and create long term value for continuing
shareholders. In India, while buy-back of securities is not permitted as a treasury option under which the
securities may be reissued later, a company can resort to buy-back to reduce the number of shares issued
and return surplus cash to the shareholders.
The buy-back of securities is governed by Section 68, 69 and 70 of the Companies Act, 2013 and Rule
17 of the Companies (Share Capital and Debentures) Rules, 2014. For Listed Companies, the SEBI
Regulations for Buy Back will also be applicable.

Buy-back of
Securities

to reorganise its return cash to enhance overall

capital structure shareholders shareholders' value
Objectives of Buy-back:-
Buy-back is a process whereby a company purchases its own shares or other specified securities from the
lable the Holders thereof.

• To strategically increase promoters’ shareholding subject to compliance with

1. SEBI (SAST) Regulations

2.

3.

4.

5.

6.

7.

8.

9.

thinly traded.
10.
Definitions:-
It includes a person, -
• Who directly or indirectly by himself or in combination with relatives, exercise
Associate
control over the company; or
• Whose employee, officer or director is also a director, officer or employee of company.
The period between the date of board of directors resolution; or date of declaration
of results of the postal ballot for special resolution, as the case may be, to authorize buy-
Buy-back Period
back of shares of the company and the date on which the payment of consideration to
shareholders who have accepted the buy-back offer is made.
It has the Same meaning as defined in clause (e) of Sub-regulation (1) of regulation (2) of
the Securities and Exchange Board of India (Substantial Acquisition of Shares and
Control Takeovers) Regulations, 2011;

‘Odd lots' mean the lots of shares or other Specified securities of a company, whose shares
are listed on a recognised stock exchange, which are smaller than such marketable lots,
Odd Lots as may be Specified by the Stock exchange

A Shareholder of a company, who holds shares or other Specified securities whose market
value, on the basis of closing price of shares or other Specified securities, on the
Small Shareholder recognised stock exchange in which highest trading volume in respect of such securities,
as on record date is not more than two lakh rupee.
It includes employees' stock option or other securities as may be notified by the central
Specified securities
Government from time to time.

An offer by a company to buy-back its own shares or other Specified securities through a
letter of offer from the holders of the shares or other Specified securities of the company.
Tender offer

Conditions for Buy-back of shares:-

The maximum limit of any buy-back shall be 25% or less of the aggregate of paid-up capital and free
reserves of the company, based on both Standalone and consolidated financial statements of the company
All shares or other Specified securities for buy-back Shall be fully paid-up.
Note:
• In respect of the buy-back of equity shares in any financial year, the reference to 25% in this
regulation Shall be construed with respect to its total paid-up equity capital in that financial year.
• The ratio of the aggregate of secured and unsecured debts owed by the company to the paid-up
capital and free reserves after buy-back shall,-
(a) Be less than or equal to 2:1, based on both Standalone and consolidated financial
statements of the company. However if a higher ratio of the debt to capital and free reserves
for the company has been notified under the companies Act, 2013, the Same Shall prevail;
or
(a) Be less than or equal to 2:1, based on both Standalone and consolidated financial
statements of the company, after excluding financial statements of all subsidiaries that are
non-banking financial companies and housing finance companies regulated by reserve
Bank of India or National housing Bank, as the case may be. However buy-back of
 securities shall be permitted only if all such excluded subsidiaries have their ratio of
aggregate of secured and unsecured debts to the paid-up capital and free reserves of not
more than 6:1 on Standalone basis.

Additional conditions for Buy-back of shares:-

• A company Shall not buy-back its shares or other Specified securities :
(a) So as to delist its shares or other Specified securities from the Stock exchange.
(b) From any person through negotiated deals, whether on or off the stock exchange or
through spot transactions or through any private arrangement.
• A company shall not make any offer of buy-back within a period of one year reckoned from the
date of expiry of buy-back period of the preceding offer of buy-back, if any.
• A company shall not allow buy-back of its shares unless the consequent reduction of its share capital is
effected.

Methods of Buy-back:-

from the existing shareholders or

other Specified SecuritieS holders
on a proportionate basis through
Methods of Buy-back

the tender offer

Book-building Process

from the open market through

Stock Exchange

from odd-lot holders

Sources of Buy-back:-

the securities
premium
account or
the proceeds of
the issue of any
its free reserves shares or other
Specified
securities
A Company may
buy-back shares
or other
securities out

of-
Prohibitions for Buy-back:-
The Company Shall not directly or indirectly purchase its own shares or other Specified securities:
• Through any subsidiary company including its own subsidiary companies;
• Through any investment company or group of investment companies; or
• If a default is made by the company in the repayment of deposits accepted either before or after
the commencement of the Companies Act, interest payment thereon, redemption of debentures
or preference shares or payment of dividend to any shareholder, or repayment of any term loan or
interest payable thereon to any financial institution or banking company.

Authorization for Buy-back:-

A special resolution is No special resolution is required where the buy-

Authorisation for Buyback in the
required to passed at a back is 10% or less of the total paid-up equity
Articles of the Company.
general meeting of the capital and free reserves of the company and
company for such such buy-back has been authorised by the board
authorisation. of directors by means of a resolution passed at
its meeting.
 Note:
• In case of Special resolution, a copy of the resolution passed at the general meeting Shall be filed
with SEBI and the Stock exchanges where the shares or other Specified securities of the company
are listed, within seven days from the date of passing of the resolution.
• In case of only Board Resolution, a copy of Board Resolution passed in the meeting of the Board
of Directors, Shall file with SEBI and the Stock exchanges, where the shares or other Specified
securities of the company are listed, within two working days of the date of the passing of the
resolution.
Every buy-back shall be completed within a period of one year from the date of passing of the special
resolution at general meeting, or the resolution passed by the board of directors of the company, as the
case may be.
The company Shall, after expiry of the buy-back period, file with the registrar of companies and SEBI,
a return containing Such particulars relating to the buy-back within thirty days of Such expiry, in the
format as Specified in the Companies (Share Capital and Debentures) Rules, 2014.

Explanatory Statement: -
The notice of the meeting at which the special resolution is proposed to be passed shall be accompanied by
an explanatory Statement pursuant to Section 102 of the companies Act containing mandatory disclosures as
Specified under Sub-Section 3 of Section 68 of the companies Act -
• A full and complete disclosure of all material facts;
• The necessity for the buy-back;
• The class of shares or securities intended to be purchased under the buy-back;
• The amount to be invested under the buy-back; and
• The time-limit for completion of buy-back.

Additional Disclosures:-
The company is required to provide an additional disclosure as per Schedule I to these regulations, in
addition to disclosures mentioned above under Sub Section 3 of Section 68 of the companies Act, 2013 as
discussed below:
(i) Date of the Board meeting at which the proposal for buy-back was approved by the Board of
Directors of the company;
(ii) Necessity for the buy-back;
(iii) Maximum amount required under the buy-back and its percentage of the total paid up capital and free
reserves;
(iv) Maximum price at which the shares or other Specified securities are proposed be bought back
and the basis of arriving at the buy-back price;
(v) Maximum number of securities that the company proposes to buy-back;
(vi) Method to be adopted for buy-back as referred to in sub-regulation (iv) of regulation 4;
(vii) (a) the aggregate shareholding of the promoter and of the directors of the promoters, where the
promoter is a company and of persons who are in control of the company as on the date of
the notice convening the General Meeting or the Meeting of the Board of Directors;
(b) Aggregate number of shares or other Specified securities purchased or Sold by persons
 including persons mentioned in (a) above from a period of six months preceding the date
of the Board Meeting at which the buy-back was approved till the date of notice convening
the general meeting;
(c) The maximum and minimum price at which purchases and sales referred to in (b) above
were made along with the relevant dates;
(viii) Intention of the promoters and persons in control of the company to tender shares or other
Specified securities for buy-back indicating the number of shares or other Specified securities,
details of acquisition with dates and price;
(ix) A confirmation that there are no defaults subsisting in repayment of deposits, redemption of
debentures or preference shares or repayment of term loans to any financial institutions or banks;
(x) A confirmation that the Board of directors has made a full enquiry into the affairs and prospects
of the company and that they have formed the opinion:
(a) That immediately following the date on which the General Meeting or the meeting of the Board
of Directors is convened there will be no grounds on which the company could be found
unable to pay its debts;
(b) As regards its prospects for the year immediately following that date that, having regard
to their intentions with respect to the management of the company’s business during that
year and to the amount and character of the financial resources which will in their view be
available to the company during that year, the company will be able to meet its liabilities
as and when they fall due and will not be rendered insolvent within a period of one year
from that date; and
(c) In forming their opinion for the above purposes, the directors shall take into account the
liabilities as if the company were being wound up under the provisions of the Companies
Act, 1956 or Companies Act, 2013 or the Insolvency and Bankruptcy Code 2016 (including
prospective and contingent liabilities);
(xi) A report addressed to the Board of Directors by the company’s auditors stating that-
(a) They have inquired into the company’s state of affairs;
(b) The amount of the permissible capital payment for the securities in question is in their view
properly determined; and
(c) The Board of directors have formed the opinion as Specified in clause (x) on reasonable
grounds and that the company will not, having regard to its state of affairs, will not be
rendered insolvent within a period of one year from that date.
Buy-back process: -

1 2 3

Appointment of Public Announcement to

Filing the Resolution be released in
Merchant Banker(s)/ with SEBI/ Stock newspapers and
Regist rar Exchanges(s) Simultaneous filing with
SEBI/Stock Exchnage

4 5 6

Determination of Offer Extinguishment of

Acceptance and Certificates and
Price, Opening and Payment to Security intimation to Stock
Closure of the Buyback Holders Exchange
Offer

7 8 9

File the return with ROC Issue of Public

Merchant Banker to file advertisement in
and SEBI
National daily on
Final Report with SEBI Completion of Buy-back
process

BUY-BACK THROUGH TENDER OFFER

A company may buy-back its shares or other Specified securities from its existing securities holders
on a Proportionate basis in accordance with the provisions of these Regulations. However fifteen percent
of the number of securities which the company proposes to buy-back or number of Securities entitled
as per their shareholding, whichever is higher, shall be reserved for small shareholders.

Additional Disclosures

In addition to the disclosures provided in Schedule I to these regulations, the following disclosure are
required to be made in the explanatory Statement:
• The maximum price at which the buy-back of shares or other Specified securities Shall be made
and whether the board of directors of the company is being authorized at the general meeting to
determine subsequently the Specific price at which the buy-back may be made at the appropriate
time;
• If the promoter intends to offer his shares or other Specified securities, the quantum of shares or
other Specified securities proposed to be tendered and the details of their transactions and their
holdings for the last six months prior to the passing of the special resolution for buy-back
 including information of number of shares or other Specified securities acquired, the price and
the date of acquisition.
Disclosures, filing requirements and timelines for public announcement and draft letter of offer

1. Public • The company shall make a public announcement within two working days from
Announcement the date of declaration of results of the postal ballot for special resolution/
board of directors resolution in at least one English National Daily, one Hindi
National Daily and one Regional language daily, all with wide circulation at the
place where the registered Office of the company is Situated.
• A copy of the public announcement along with the soft copy, shall also be
submitted to SEBI, simultaneously, through a merchant banker.

2. Filing with SEBI The company Shall within five working days of the public announcement file the
following :
• A draft letter of offer, along with a Soft copy, containing disclosures as Specified
in these regulations through a merchant banker who is not associated with the
company.
• A declaration of Solvency in Specified form and in a manner provided in Section
68(6) of the Companies Act, 2013.
• Prescribed fees as Specified in these regulations.
SEBI may provide its comments on the draft letter of offer within seven working days
of the receipt of the draft letter of offer. Letter of Offer shall be dispatch to the
shareholders after making changes suggested by SEBI, if any.
Offer Procedure

• While making buy-back offer, the company shall announce a record date in the public
announcement for the purpose of determining the entitlement and the names of the security
holders, who are eligible to participate in the proposed buy-back offer.
• The company shall dispatch the letter of offer along with the tender form to all securities holders
which are eligible to participate in the buy-back offer not later than five working days from the
receipt of communication of comments from SEBI.
• If case an eligible public shareholder does not receive the tender offer/off form, even though he can
participate in the buy-back off and tender shares in the manner as provided by the SEBI.
• The date of the opening of the offer Shall be not later than five working days from the date of
dispatch of the
Letter of offer. It shall be remained open for a period of ten working days.
• The company shall provide the facilities for tendering of shares by the shareholders and
settlement of the same, through the stock exchange mechanism in the manner as provided by the
SEBI.
• The company Shall accept shares or other Specified securities from the securities holders on the basis
of their Entitlement as on record date.
• The shares proposed to be bought back shall be divided into two categories;
a. Reserved category for small shareholders; and
b. General category for other shareholders, and the entitlement of a shareholder in each
category shall be calculated accordingly.
Escrow Account

The company shall as and by way of security for performance of its obligations under the regulations,
on or before the opening of the offer, deposit in an escrow account Such Sum as Specified under SEBI
regulations. The amount in the escrow Shall be deposited in the following manner:

Amount of Consideration % of amount to be deposited

Consideration not more than Rs. 100 crores 25 per cent of the consideration payable;
Consideration exceeds Rs. 100 crores 25 percent upto Rupees 100 crores and 10 percent
thereafter.

The escrow account referred to above shall consist of

Cash deposited with

a scheduled • The company shall, while opening the account empower the merchant
commercial bank, banker to instruct the bank to make payment the amount lying to the
OR credit of the escrow account, as provided in the regulations.

Bank guarantee in • Such bank guarantee shall be in favour of the merchant banker and shall
favour of the be valid until thirty days after the expiry of buyback period.
merchant banker,
OR

Deposit of acceptable • The Company shall empower the merchant banker to realise the
securities with value of such escrow account by sale or otherwiSe and if there iS any
appropriate margin, deficit on realiSation of the value of the securities, the merchant
with the merchant banker shall be liable to make good any Such deficit.
banker,
OR

• In case the escrow account consists of bank guarantee or approved

securities, these shall not be returned by the merchant banker till
completion of all obligations under the regulations.
• Where the escrow account consists of bank guarantee or deposit of
A combination of all approved securities, the company shall also deposit with the bank in
ABOVE cash a sum of at least one per cent of the total consideration payable,
as and by way of Security for fulfillment of the obligationS under the
regulations by the company.

Note: The cash component of the escrow account may be maintained in an interest-bearing account.
However, the merchant banker shall ensure that the funds should be available at the time of making
payment to shareholders.
After the payment of consideration to all the securities holders who have accepted the offer and after
completion of all formalities of buy-back, the amount, guarantee and securities in the escrow, if any, shall
be released to the company.
In case of non-fulfilment of obligations under the regulations, SEBI in the interest of the securities
holders may forfeit the escrow account either in full or in part. Such forfeited amount may be
distributed amongst the securities holders who accepted the offer and balance, if any, on pro rata which
shall be utilized for investor protection.
Closure and Payment to Securities Holders

• The company shall open a special account with a banker to an issue, registered with the
SEBI immediately after the date of closure of the offer, and deposit therein, such sum as would,
together with ninety percent of the amount lying in the escrow account, make-up the entire sum
due and payable as consideration for buy-back in terms of these regulations and for this purpose,
may transfer the funds from the escrow account.
• The company Shall complete the verification of offers received and make payment of
consideration to those holders of securities whose offer has been accepted and return the
remaining shares or other Specified securities to the securities holders within seven working
days of the closure of the offer.
Extinguishment of Certificate and other Closure Compliances

Period of fifteen dayS Shall not extend

beyond seven days of expiry of buy-back
period in any case.

The company Shall furniSh a certificate to the SEBI within 7 dayS extinguiShment and
deStruction of the certificateS, certifying compliance aS Specified above, and duly certified
and verified by:

a) Registrar and whenever there is no registrar, by the merchant banker;

b) Two directors of the company, one of whom shall be a managing director, where
there is one; and
c) the statutory auditor of the company.
ODD-LOT BUY-BACK

The provisions pertaining to buy-back through tender offer as Specified above Shall be apply mutatis
mutandis to odd-lot shares or other Specified securities.
BUY-BACK FROM THE OPEN MARKET
The company may buy-back of shares or other specified securities from the Open Market may be in any of
the following methods:

Through Stock
Exchaange Book-building
Process

The company Shall ensure that at least 50% of the amount earmarked for buy-back, as Specified in the
resolution of the board of directors or the Special resolution, as the case may be, is utilized for buying-
back shares or other Specified securities.
Buy-back of Shares Through Stock Exchange

1. Pre-conditions • The company may buy-back only on stock exchanges having nationwide
trading terminals.
• The buy-back of the shares or other Specified securities through the Stock exchange
Shall not be made from the promoters or persons in control of the company
• The buy-back of shares or other Specified securities Shall be made only
through the order matching mechanism except ‘all or none’ order matching
system.
2. Disclosures, filing • The company shall appoint a merchant banker and make a public
requirements and announcement in manner as Specified in buy-back of shares through
timelines of public tender offer.
announcement
• The public announcement shall be made within two working days from
the date of passing the board of director’s resolution or date of declaration of
results of the postal ballot for special resolution, as relevant and shall contain
disclosures as Specified in these regulations.
• Simultaneously with the issue of Such public announcement, the company Shall file
A copy of the public announcement with SEBI along with the prescribed fees.
• The public announcement shall also contain disclosures regarding details of
the brokers and stock exchanges through which the buy-back of shares or other
Specified securities would be made.
Note: In case of the buy-back from open market, no draft letter of offer/ letter
Of offer is required to be filed with SEBI.
3. Opening of the • The identity of the company as a purchaser shall be appeared on the electronic
offer on stock screen when the order is placed.
exchange
• The buy-back offer shall be opened not later than seven working days from
the date of public announcement and shall be closed within six months
from the date of opening of the offer.
4. Subsequent • The company shall submit the information regarding the shares or other
compliances Specified securities bought-back, to the Stock exchange on a daily basis in
Such form as may be Specified by SEBI and the Same Shall be uploaded
immediately on the official website Stock exchange and on Company'S
website.
5. Procedure for buy-back • A separate window shall be created by the stock exchange, which shall
shares or other Specified remain open during the period of buy-back, for buy-back of shares or
securities in Physical form other Specified securities in physical form.
• The Company shall buyback shares or other securities holding physical
shares only through this Separate window after verification of identity
and address of eligible shareholders by broker.
• The price at which the shares or other Specified securities are bought
back shall be the volume weighted average price of the shares or other
Specified securities bought-back, other than in the physical form, during
the calendar week in which Such shares or other Specified securities were
received by the broker.
However, the price of shares or other Specified securities tendered during the
first calendar week of the buy-back Shall be the volume weighted average
market price of the shares or other Specified securities of the company during
the preceding calendar week.
Note: In case no shares or other specified securities were bought back in
the normal market during calendar week, the preceding week when the
company has last bought back the shares or other specified securities may
be considered.
6. Escrow account • The company shall, before opening of the offer, create an escrow
account towards security for performance of its obligations under
these regulations, and deposit in escrow account 25 per cent of the
amount earmarked for the buy-back as specified in the resolution of the
board of directors or the special resolution, as the case may be.
• The escrow account may be in the form of:
a) Cash deposited with any scheduled commercial bank; or
b) Bank guarantee issued in favour of the merchant banker by any
scheduled commercial bank.
• For such part of the escrow account as is in the form of a cash deposit
with a scheduled commercial bank, the company shall while opening
the account, empower the merchant banker to instruct the bank to
make payment of the amounts lying to the credit of the escrow account,
to meet the obligations arising out of the buy-back.
• For such part of the escrow account as is in the form of a bank guarantee;
a) The same shall be in favour of the merchant banker and shall be
kept valid for a period of thirty days after the expiry of buy-back
period of the offer or till the completion of all obligations under
these regulations, whichever is later.
b) The same shall not be returned by the merchant banker till
completion of all obligations under the regulations.
• Where part of the escrow account is in the form of a bank guarantee,
the company shall deposit with a scheduled commercial bank, in cash,
a sum of at least 2.5 per cent of the total amount earmarked for buy-
back as specified in the resolution of the board of directors or the
special resolution, as the case may be, as and by way of security for
fulfillment of the obligations under the regulations by the company.
 • The amount may be released from escrow account for making of
payment to the shareholders subject to at least 2.5 per cent of the
amount earmarked for buy-back as Specified in the resolution of the
board of directors or the special resolution, as the case may be,
remaining in the escrow account at all points of time.
• After utilisation of at least 50 % of the amount earmarked for buy-back
as Specified in the resolution of the Board of directors or Special
Resolution, as case may be, the amount and the guarantee remaining in
the escrow account, if any, shall be released to the company.
• In the event of non-compliance as Specified above, SEBI may direct the
merchant banker to forfeit the escrow account, subject to a maximum
of 2.5 percent of the amount earmarked for buy-back as Specified in the
resolution of the board of directors or the special resolution, as the case
may be, except in cases where,-
a) Volume weighted average market price (VWAMP) of the shares
or other Specified securities of the company during the buy-back
period was higher than the buy-back price as certified by the
merchant banker based on the inputs provided by the Stock
exchanges.
b) Sell orders were inadequate despite the buy orders placed by the
company as certified by the merchant banker based on the inputs
provided by the stock exchanges.
c) Such circumstances existed which were beyond the control of
the company and in the opinion of SEBI merit consideration.
d) In the event of forfeiture for non-fulfilment of obligations as
Specified in these regulation, the amount forfeited Shall be
deposited in the Investor Protection and Education Fund of
Securities and Exchange Board of India.
7. Extinguishment of • The provisions pertaining to the extinguishment of certificates for
Certificates tender offers Specified above Shall apply for extinguishment of
certificates for buy-back from open market.
• The verification of acceptances Shall be completed by the company
within fifteen days of the payout.
• The company shall extinguish and physically destroy the securities
certificates So bought back during the month in the presence of a
Merchant Banker and the Statutory Auditor, on or before the fifteenth
day of the succeeding month.
However, the company shall ensure that all the securities bought-back are
extinguished within seven days of expiry of buy-back period.

Buy-back through Book Building

1. Pre-conditions • Special resolution or Board Resolution, as the case may be, shall be passed for
authorisation of Buy-back of shares or other Specified securities in the
manner as Specified under these regulations.
2. Disclosures, filing • The company shall appoint a merchant banker and make a public announcement
requirements and made disclosures in public announcement under these regulations.
and timelines
• The public announcement shall be made at least 7 days prior to the
For public
commencement of buy-back.
announcement
• The public announcement shall also contain the detailed methodology of
the book-building process, the manner of acceptance, the format of acceptance
to be sent by the securities holders pursuant to the public announcement and
the details of bidding centres.
 3. Escrow account • The provisions with respect to deposit of amount in escrow account as
specified in buy-back through tenders offers shall also apply to buy back of
shares or other specified securities through book building process.
• The deposit in the escrow account shall be made before the date of the public
announcement.
• The amount to be deposited in the escrow account shall be determined with
Reference to the maximum price as specified in the public announcement.
The cash component of the escrow account may be maintained in an interest
bearing account. However, the merchant banker shall ensures that the funds
should be available at the time of making payment to shareholders.
4. Filing with SEBI • A copy of the public announcement Shall be filed with SEBI within two days
Of such announcement along with the prescribed fees.
5. Offer procedure • The book-building process shall be made through an electronically linked
transparent facility.
• The number of bidding centers shall not be less than thirty and there shall be
at least one electronically linked computer terminal at all the bidding centers.
• The offer for buy-back shall remain open to the securities holders for a period
Not less than fifteen days and not exceeding thirty days.
• The merchant banker and the company shall determine the buy-back price
based on the acceptances received.
• The final buy-back price, which shall be the highest price accepted shall be paid
to all holders whose shares or other specified securities have been accepted
for buy-back.
• The provisions pertaining to verification of acceptences and the provisions
pertaining to opening of special account and payment of consideration for
tender offer shall be applicable mutatis mutandis to the buy-back through
book building.
6. Extinguishment of • The provisions pertaining to extinguishment of certificates for tender offer
Certificates Shall be applicable mutatis mutandis to the buy-back through book building.

OBLIGATIONS FOR ALL BUY-BACK OF SHARES OR OTHER SPECIFIED SECURITIES

 Obligations of the Merchant
Obligations of the Company
Banker
• The company Shall ensure that, - The merchant banker shall
ensure that -
» the letter of offer, the public announcement of the offer or any other
advertisement, circular, brochure, publicity material shall
contain true, factual and material information and shall not • The company is able to
contain any misleading information and must state that the implement the offer;
directors of the company accept the responsibility for the • The provision relating to
information contained in such documents; escrow account has been
» the company Shall not issue any shares or other Specified securities complied with;
including by way of bonus till the date of expiry of buy- back • Firm arrangements for
period for the offer made under these regulations; monies for payment to fulfill
» the company shall pay the consideration only by way of cash; the obligations under the
offer are in place;
» the company shall not withdraw the offer to buy-back after the draft
letter of offer is filed with SEBI or public announcement of the •
The public announcement of
offer to buy-back is made; buy-back is made in terms of
the regulations;
» the promoter(s) or his/their associates shall not deal in the shares
or other Specified securities of the company in the Stock exchange • The letter of offer has
or off-market, including inter-se transfer of shares among the been filed in terms of the
promoters during the period from the date of passing the regulations;
resolution of the board of directors or the special resolution, as • A due diligence certificate
the case may be, till the closing of the offer. along with the draft letter of
» the company shall not raise further capital for a period of one year offer has been furnished to
from the expiry of buy-back period, except in discharge of its SEBI;
subsisting obligations. • The contents of the public
announcement of offer as
• No public announcement of buy-back shall be made during the
well as the letter of offer are
pendency of any scheme of amalgamation or compromise or
true, fair and adequate and
arrangement pursuant to the provisions of the Companies Act, 2013.
quoting the source wherever
• The company Shall nominate a compliance officer and investors service necessary;
centre for compliance with the buy-back regulations and to redress the • Due compliance of sections
grievances of the investors. 68, 69 and 70 of the
• Particulars of the Security certificate extinguished and destroyed Shall Companies Act and any other
be furnished by the company to the stock exchanges where the shares laws or rules as may be
or other Specified securities of the company are listed within Seven applicable in this regard has
days of extinguishment and destruction of the certificates. been made;

• The company Shall not buy-back the locked-in shares or other Specified • The bank with whom the
securities and non-transferable shares or other Specified securities till escrow or special amount has
the pendency of the lock-in or till the shares or other Specified securities been deposited releases the
become transferable. balance amount to the
company only upon
• The company shall within two days of expiry of buy-back period issue fulfilment of all obligations
A public advertisement in a national daily, inter alia, disclosing: by the company under the
regulations;
 a) Number of shares or other Specified • A final report is Submitted to SEBI in the form
Securities bought; Specified within fifteen days from the date of
expiry of buy-back period.
b) Price at which the shares or other Specified
Securities bought;
c) Total amount invested in the buy-back;
d) Details of the securities holders from whom
shares or other Specified securities exceeding
one percent of total shares or other Specified
securities are bought back; and
e) The consequent changes in the capital
structure and the shareholding pattern after
and before the buy-back.
• The company in addition to these regulations shall
comply with the provisions of buy-back as
contained in the Companies Act and other
applicable laws.