India’s capital markets regulator SEBI has imposed fresh curbs on the placement of bids, price, and volume for companies looking to buy back shares through the stock exchange route.

What Happened? Per a circular released on March 8 by SEBI, companies cannot purchase (buy back) in a single day more than 25% of shares of the preceding last 10 days’ average daily volume (in value) of the stock.

SEBI has also specified that companies cannot place bids in the pre-open market, during the first 30 minutes and the last 30 minutes of each day's trading session.

The new restrictions also require the purchase order to be within the range of plus or minus 1% from the last traded price. In this regard, the company as well as its appointed broker should ensure compliance with the provisions.

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Stock exchanges are authorised to impose fines in case of non-compliance, SEBI has said. In terms of margin requirements for deposits in an escrow account, SEBI has made it known that the escrow account can consist of cash and/or instruments other than cash.

The new restrictions get operational starting today, i.e., March 9, 2023.

As noted in a PTI report, the regulator also amended buyback of securities rules last month to streamline the process of buyback, create a level playing field for investors and promote ease of doing business.

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