SEBI Board Meet: Market regulator decides to gradually phase out share buyback via stock exchange route – check all decisions here

The Securities and Exchange Board of India (SEBI) on Tuesday decided to gradually phase out the buyback of shares by companies through the stock exchange route and approved steps to boost governance at stock exchanges and other market infrastructure institutions (MIIs).

The capital market regulator SEBI’s board approved several proposals, including decisions on share buyback, exchange governance, and market infrastructure, during its meeting on Tuesday.

SEBI Chairperson Madhabi Puri Buch said the regulator has chosen the tender offer route for share buyback as the present mode is vulnerable to favouritism. "This is a glide path and will lead to the phasing out of the present buyback mode (through the stock exchange route)," PTI quoted her as saying.

Watch: SEBI Press Conference: Watch Madhabi Puri Buch's Address After SEBI's Board Meeting

Sebi Chairperson Madhabi Puri Buch told reporters here that the regulator has chosen the tender offer route for share buybacks as the present mode is vulnerable to favouritism.

The minimum utilisation of the amount for buyback via stock exchange increased to 75 per cent from 50 per cent earlier and the creation of a separate window on stock exchanges for understanding buyback was also approved by the market regulator.

Currently, for share buyback, companies have both the options of the stock exchange and tender offer.

Besides, SEBI board has decided to reduce the time taken for registration of FPIs to facilitate ease of doing business. Norms will also be amended to facilitate sustainable finance in the country and curb 'greenwashing'.

Also Read: SEBI to give Systemically Important Broker status for big brokers soon

Reduction in time taken for registration of Foreign Portfolio Investors (FPIs), introduction of Investor Risk Reduction Access Platform to protect investors in case of disruptions in trading services provided by a stock broker and governance norms for REITs and InvITs were among the other measures approved by Sebi board.

Similarly, SEBI has also made it mandatory for MIIs to appoint Public Interest Directors (PIDs) with expertise in technology, law, regulatory, finance, and capital markets.

Regarding the stricter norms for market infrastructure institutions, the Sebi chief said that no wrongdoings happen in a vacuum.

Also Read: SEBI to issue regulations for finfluencers: Here's what to expect

"Any wrongdoing is known to the key people but they chose to walk away or look away as if it is not their job. But we want to make it their job," she said.

The Sebi board also gave its nod for introducing a regulatory framework for 'Execution Only Platforms' for direct plans of mutual fund schemes. The move is aimed at further promoting mutual funds as an investment vehicle.

A number of entities, including investment advisers and stock brokers, offer execution services like purchase and redemption of direct plans of mutual fund schemes through the digital mode.

Also, the board approved a framework for adoption of cloud services by Sebi Regulated Entities (REs). It would be a principle-based framework containing nine broad principles which must be followed by REs for deploying cloud services.

With PTI Inputs