Sebi: Firms must reserve 15% for small shareholders

Market regulator Sebi has modified norms for share buyback through the tender offer route under which companies will have to reserve 15 per cent of the offer for small shareholders.

Small shareholder refers to someone who holds shares not exceeding Rs 2 lakh of a listed company. The buyback process through the tender offer route can be completed within 41 days of the board approval.

As per the guidelines, a company would have to publish advertisement in newspapers within two days after securing board approval for the buyback and after five days it has to file the offer document with the Sebi. “The offer for buyback shall remain open for 10 working days,” Sebi said, adding that within 7 days the company would have to pay the buyback amount to the shareholders.

At present there are two ways by which a company can come out with a buyback — open market and tender offer. While in open market offer, companies can buyback shares from shareholders without knowing the buyer, under tender offer the company has to write to every shareholder saying it is willing to buyback shares in proportion to issue.

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