Executive Summary:
This document outlines the Securities and Exchange Board of India (SEBI) BuyBack of Securities Second Amendment Regulations, 2019. It amends the 2018 regulations regarding buyback of securities, focusing on financial statement considerations and debt-to-capital ratios. These regulations came into force on the thirtieth day from their publication in the Official Gazette, dated September 19, 2019.
Key Points / Main Content:
Amendments to BuyBack Regulations:
- These regulations are called the Securities and Exchange Board of India BuyBack of Securities Second Amendment Regulations, 2019.
- The regulations came into force on the thirtieth day from their publication in the Official Gazette.
Amendments to Regulation 4:
- In subregulation i, the phrase ", based on both standalone and consolidated financial statements of the company" shall be inserted after "company" and before the symbol ":".
- Subregulation ii is replaced. The new subregulation states that the ratio of secured and unsecured debts to paid-up capital and free reserves after buyback:
- Must be less than or equal to 2:1, based on both standalone and consolidated financial statements of the company.
- A higher debt-to-capital ratio notified under the Companies Act, 2013 will prevail.
- Alternatively, can be less than or equal to 2:1, excluding financial statements of non-banking financial companies and housing finance companies regulated by Reserve Bank of India or National Housing Bank.
- Buyback is only permitted if excluded subsidiaries have a debt-to-capital ratio of not more than 6:1 on a standalone basis.
- In subregulation iv, the proviso is replaced, stating that buyback from the open market shall be less than 15% of the paid-up capital and free reserves of the company, based on both standalone and consolidated financial statements.
Amendments to Regulation 5:
- In subregulation i, in clause b, in the proviso, the phrase ", based on both standalone and consolidated financial statements of the company" shall be inserted after "company" and before the symbol ";".
Impact Analysis:
Companies Undertaking Buybacks:
Impact: Companies need to comply with the revised regulations regarding financial statement considerations and debt-to-capital ratios when conducting buybacks. The amendments to regulations 4 and 5 directly impact the ability of companies to perform buybacks.
Action Required: Review existing buyback policies and procedures to ensure compliance with the amended regulations, particularly concerning debt-to-capital ratios and the consideration of consolidated financial statements.
Securities and Exchange Board of India (SEBI):
Impact: SEBI is responsible for enforcing the amended regulations and ensuring compliance by companies undertaking buybacks.
Action Required: Update monitoring and enforcement mechanisms to reflect the changes introduced by the Second Amendment Regulations, 2019.
Investors:
Impact: Investors are indirectly impacted, as the regulations affect the buyback activities of companies, potentially influencing stock prices and shareholder value.
Action Required: Stay informed about companies' compliance with the new buyback regulations and assess the potential impact on investment decisions.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): A regulatory body for the securities market in India. The notification pertains to regulations issued by SEBI.
Securities and Exchange Board of India Act, 1992: An act of the Indian Parliament that established the Securities and Exchange Board of India (SEBI).
Companies Act, 2013: An Act of the Parliament of India which regulates incorporation of a company, responsibilities of a company, directors, dissolution of a company and other related activities.
Securities and Exchange Board of India BuyBack of Securities Regulations, 2018: The principal regulations being amended by this notification, concerning the buyback of securities by companies.
Securities and Exchange Board of India BuyBack of Securities Second Amendment Regulations, 2019: The title of the regulations which are the subject of this notification.
Mumbai, Maharashtra: The city in India where SEBI's head office is located and the place from where the notification was issued.
Ajay Tyagi: The Chairman of the Securities and Exchange Board of India (SEBI) at the time of the notification.
New Delhi, Delhi: The location of the Government of India Press, where the document was printed.
jftLVªh laö Mhö ,yö&33004@99 REGD. NO. D. L.-33004/99
vlk/kj.k
EXTRAORDINARY
Hkkx III—[k.M 4
PART III—Section 4
izkf/dkj ls izdkf'kr
PUBLISHED BY AUTHORITY
la- 329] ubZ fnYyh] c`gLifrokj] flrEcj 19] 2019@Hkkæ 28] 1941
No. 329] NEW DELHI, THURSDAY, SEPTEMBER 19, 2019/BHADRA 28, 1941
भभभभााााररररततततीीीीयययय (cid:1)(cid:1)(cid:1)(cid:1)ििििततततभभभभििििूूूू तततत औऔऔऔरररर ििििववववििििननननममममयययय बबबबोोोोडडडड (cid:9)(cid:9) (cid:9)(cid:9)
अअअअििििधधधधससससचचूूचचूू ननननाााा
मु(cid:3)बई, 19 िसत(cid:3)बर, 2019
भभभभााााररररततततीीीीयययय (cid:1)(cid:1)(cid:1)(cid:1)ििििततततभभभभििििूूूू तततत औऔऔऔरररर ििििववववििििननननममममयययय बबबबोोोोडडडड (cid:9)(cid:9) (cid:9)(cid:9)
[[[[(cid:1)(cid:1)(cid:1)(cid:1)ििििततततभभभभििििूूूूततततयययय(cid:11)(cid:11)(cid:11)(cid:11) ककककोोोो (cid:12)(cid:12)(cid:12)(cid:12)यययय (cid:13)(cid:13)(cid:13)(cid:13)ाााारररराााा ववववाााापपपपसससस ललललननेेननेे ाााा ((((बबबबाााायययय----बबबबककैैककैै ))))]]]] ((((ददददससससूूूू रररराााा ससससशशशशंंंं ोोोोधधधधनननन)))) ििििववववििििननननययययमममम,,,, 2222000011119999
सससस..ंं..ंं ससससबबेेबबेे ीीीी////एएएएलललल....एएएए....डडडडीीीी....----एएएएनननन....आआआआरररर....ओओओओ....////जजजजीीीीएएएएनननन////2222000011119999////33333333....————बोड,(cid:12) कंपनी अिधिनयम, 2013 क(cid:14) धारा 68 क(cid:14)
उप-धारा (2) के खंड (च) के साथ प(cid:16)ठत भारतीय (cid:18)ितभिू त और िविनमय बोड (cid:12) अिधिनयम, 1992 (1992 का 15) क(cid:14) धारा
11 क(cid:14) उप-धारा (1) एवं (2) तथा धारा 30 (cid:21)ारा (cid:18)द(cid:24) शि(cid:26)य(cid:28) का (cid:18)योग करत े (cid:30)ए एत ारा भारतीय (cid:18)ितभिू त और
िविनमय बोड (cid:12) [(cid:18)ितभिू तय(cid:28) को !य (cid:21)ारा वापस लने ा (बाय-बैक)] िविनयम, 2018 का और संशोधन करन े के िलए
िन#िलिखत िविनयम बनाता ह,ै अथा(cid:12)त,्-
1. इन िविनयम(cid:28) को भारतीय (cid:18)ितभिू त और िविनमय बोड (cid:12) [(cid:18)ितभिू तय(cid:28) को !य (cid:21)ारा वापस लेना (बाय-बैक)] (दसू रा
संशोधन) िविनयम, 2019 कहा जा सकेगा।
2. ये िविनयम राजप+ म ,इनके (cid:18)काशन क(cid:14) तारीख स ेतीसव, .दन (cid:18)वृ(cid:24) (लाग)ू ह(cid:28)गे ।
3. भारतीय (cid:18)ितभूित और िविनमय बोड (cid:12)[(cid:18)ितभूितय(cid:28) को !य (cid:21)ारा वापस लने ा (बाय-बैक)] िविनयम, 2018 म,,
(I) िविनयम 4 म,,-
क) उप-िविनयम (i) म,, श2द(cid:28) “अिधकतम सीमा” के प3ात ् और श2द(cid:28) तथा िच4न(cid:28) “कंपनी क(cid:14) समाद(cid:24) पूँजी
(पेड-अप कैिपटल)” से पूव(cid:12), िच4न तथा श2द “, कंपनी के एकल तथा समे.कत दोन(cid:28) िव(cid:24)ीय िववरण(cid:28) के
आधार पर,” अंतः9थािपत .कए जाएंगे;
ख) उप-िविनयम (ii) िन#िलिखत उप-िविनयम से (cid:18)ित9थािपत हो जाएगा, अथा(cid:12)त,्-
“(ii) !य (cid:21)ारा वापस लेन े(बाय-बैक) के प3ात्,-
4875 GI/2019 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC. 4]
क) कंपनी के एकल तथा सम.े कत दोन(cid:28) िव(cid:24)ीय िववरण(cid:28) के आधार पर, कंपनी के जमानती ऋण(cid:28)
(िस;योड (cid:12) डटै ) और गैर-जमानती ऋण(cid:28) (अनिस;योड (cid:12) डटै ) के योग का समाद(cid:24) पूँजी (पेड-अप
कैिपटल) और खुली आरि=ितय(cid:28) (>(cid:14) (cid:16)रज़@स)(cid:12) से अनुपात, 2:1 से कम या उसके बराबर होगा:
परंत ु यह .क य.द कंपनी क(cid:14) पूँजी (कैिपटल) और खुली आरि=ितय(cid:28) (>(cid:14) (cid:16)रज़@स)(cid:12) स े ऋण (डटै ) का
अिधक अनुपात कंपनी अिधिनयम, 2013 के तहत अिधसिू चत .कया गया हो, तो वही अिभभावी
होगा; या
ख) कंपनी के एकल तथा सम.े कत दोन(cid:28) िव(cid:24)ीय िववरण(cid:28) [िजनम , उन सभी समनुषिं गय(cid:28) (सि29डयरीज़)
के िव(cid:24)ीय िववरण शािमल नहB .कए जाएँगे, जो ऐसी गैर-बE.कग िव(cid:24)ीय कंपिनया ँ ह(cid:28) और आवास
िव(cid:24) (हाउHसंग फाइन,स) कंपिनया ँ ह(cid:28) जो, यथाि9थित, भारतीय (cid:16)रज़व(cid:12) बEक या राLीय आवास बEक
(नेशनल हाउHसंग बEक) (cid:21)ारा िविनयिमत (रेMयूलेटेड) ह(cid:28)] के आधार पर, कंपनी के जमानती ऋण(cid:28)
(िस;योड (cid:12) डटै ) और गैर-जमानती ऋण(cid:28) (अनिस;योड (cid:12) डटै ) के योग का समाद(cid:24) पूँजी (पेड-अप
कैिपटल) और खुली आरि=ितय(cid:28) (>(cid:14)-(cid:16)रज़@स)(cid:12) से अनुपात, 2:1 से कम या उसके बराबर होगा:
परंत ु यह .क (cid:18)ितभिू तय(cid:28) (िस;यू(cid:16)रटीज़) को !य (cid:21)ारा वापस लेन े (बाय-बैक) क(cid:14) अनमु ित केवल
तभी दी जाएगी, जब ऐसी सभी समनुषिं गय(cid:28) (सि29डयरीज़), जो उपरो(cid:26)ानसु ार शािमल नहB क(cid:14)
जाएँगी, के जमानती ऋण(cid:28) (िस;योड (cid:12) डटै ) और गैर-जमानती ऋण(cid:28) (अनिस;योड (cid:12) डटै ) के योग का
समाद(cid:24) पूँजी (पेड-अप कैिपटल) और खुली आरि=ितय(cid:28) (>(cid:14)-(cid:16)रज़@स)(cid:12) स े अनुपात, एकल आधार
पर, 6:1 स ेअिधक का न हो ।”
ग) उप-िविनयम (iv) म,, परंतकु िन#िलिखत परंतुक स े(cid:18)ित9थािपत हो जाएगा, अथा(cid:12)त,्-
“परंत ु यह .क खुल े बाजार (ओपन माकOट) स े .कया जान े वाला बाय-बैक, कंपनी के एकल तथा समे.कत
दोन(cid:28) िव(cid:24)ीय िववरण(cid:28) के आधार पर, कंपनी क(cid:14) समाद(cid:24) पूँजी (पेड-अप कैिपटल) और खुली आरि=ितय(cid:28)
(>(cid:14)-(cid:16)रज़@स)(cid:12) के पंPह (cid:18)ितशत से कम होगा ।”
(II) िविनयम 5 म,, उप-िविनयम (i) म,, खंड (ख) म,, परंतकु म,, श2द(cid:28) तथा िच4न “बाय-बैक” के प3ात ् और श2द(cid:28)
“कंपनी क(cid:14) कुल समाद(cid:24) इ.Qटी पूँजी” स े पूव(cid:12) िच4न तथा श2द “, कंपनी के एकल तथा सम.े कत दोन(cid:28) िव(cid:24)ीय
िववरण(cid:28) के आधार पर,” अंतः9थािपत .कए जाएंग े।
अजय Rयागी, अSय=
[िवTापन-III/4/असा./216/19]
पपपपाााादददद (cid:16)(cid:16)(cid:16)(cid:16)टटटट(cid:18)(cid:18)(cid:18)(cid:18)पपपपणणणण ::::
1. भारतीय (cid:18)ितभिू त और िविनमय बोड (cid:12) [(cid:18)ितभिू तय(cid:28) को !य (cid:21)ारा वापस लने ा (बाय-बैक)] िविनयम, 2018,
अिधसूचना सं. सेबी/एलएडी-एन.आर.ओ./जीएन/2018/32 (cid:21)ारा, 11 िसत(cid:3)बर, 2018 को भारत के राजप+ म ,(cid:18)कािशत
(cid:30)ए थ े।
2. मूल िविनयम तRप3ात:्
क) 29 जुलाई 2019 को भारतीय (cid:18)ितभूित और िविनमय बोड (cid:12) [(cid:18)ितभूितय(cid:28) को !य (cid:21)ारा वापस लेना (बाय-बैक)]
(संशोधन) िविनयम, 2019, सं. सेबी/एलएडी -एनआरओ/जीएन/2019/26, (cid:21)ारा संशोिधत (cid:30)ए थ े।¹Hkkx IIIµ[k.M 4º Hkkjr dk jkti=k % vlk/kj.k 3
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 19th September, 2019
SECURITIES AND EXCHANGE BOARD OF INDIA (BUY-BACK OF SECURITIES)
(SECOND AMENDMENT) REGULATIONS, 2019
No. SEBI/LAD-NRD/GN/2019/33.—In exercise of the powers conferred by sub-sections (1) and (2) of
section 11 and section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with clause (f) of
sub-section (2) of section 68 of the Companies Act, 2013, the Board hereby makes the following regulations to further
amend the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018, namely, -
1. These regulations may be called the Securities and Exchange Board of India (Buy-Back of Securities) (Second
Amendment) Regulations, 2019.
2. These regulations shall come into force on the thirtieth date day fromof their publication in the Official Gazette.
3. In the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018,-
I. In regulation 4, -
a. in sub-regulation (i), after the word “company” and before the symbol “:”, the words and symbol “, based on
both standalone and consolidated financial statements of the company” shall be inserted;
b. sub-regulation (ii) shall be substituted with the following sub-regulation, namely,-:
“(ii) 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:
Provided that 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
b) 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:
Provided that 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 56:1 on standalone basis.”
c. in sub-regulation (iv), the proviso shall be replaced substituted with the following proviso, namely,-:
“Provided that the buyback from open market shall be less than fifteen per cent of the paid up capital and free
reserves of the company, based on both standalone and consolidated financial statements of the company.”
II. In regulation 5, in sub-regulation (i), in clause (b), in the proviso, after the word “company” and before the
symbol “;”, the words and symbol “, based on both standalone and consolidated financial statements of the
company” shall be inserted.
AJAY TYAGI, Chairman
[ADVT.-III/4/Exty./216/19]4 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC. 4]
Footnote:
1. The Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 was published in the
Gazette of India on September 11, 2018 vide notification No. SEBI/LAD-NRO/GN/2018/32.
2. The Principal Regulations were subsequently amended on:
a) July 29, 2019 by the Securities and Exchange Board of India (Buy-Back Of Securities) (Amendment)
Regulations, 2019 vide No. SEBI/LAD-NRO/GN/2019/26.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.