Sebi relaxes buyback norms for firms with housing finance, NBFC units

In a recent move, Sebi has announced relaxation of its norms for buyback of shares by listed companies, especially those having subsidiaries in housing finance and NBFC sectors.

The repurchase of shares by listed companies is governed by the Buyback Regulations of the Securities and Exchange Board of India (Sebi) as well as the Companies Act.

The companies need to maintain that the buyback offer cannot exceed 25% of the aggregate paid-up capital and free reserves of the company, but shareholders’ approval is required through a special resolution if the size exceeds 10%.

In addition, a buyback is permitted only if the ratio of the aggregate of secured and unsecured debts owned 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.