Sebi relaxes buyback rules for companies with housing finance arms
Capital markets regulator Sebi has eased its norms for buyback of shares by listed companies, especially those having subsidiaries in housing finance and NBFC segments. The notification comes after the board of Securities and Exchange Board of India (Sebi) approved norms in this regard in August. The repurchase of shares by listed companies is governed by the Buyback Regulations of Sebi as well as the Companies Act. Among the main conditions that the companies need to follow, the buyback offer cannot exceed 25 per cent of the aggregate paid-up capital and free reserves of the company, but shareholders' approval is required through a special resolution in case the size exceeds 10 per cent. Also, a buyback is permitted only if the ratio of the aggregate of secured and unsecured debts owed by the company after the buyback is not more than twice the paid-up capital and free reserves, unless a higher debt-to-equity ratio is specified under the Companies Act.
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