Buyback reservation for small shareholder

Modifying the norms for share buyback through the tender offer route,the Securities and Exchange Board of India has said companies will have to reserve 15 per cent of the offer for small shareholders. 15 per cent of the number of securities which the company proposes to buy back through tender offer8230; should be reserved for small shareholders, the Sebi Buyback of Securities Amendment Regulations 2012 said. Small shareholder refers to a shareholder 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 2 days after securing board approval for the buyback and after 5 days it has to file the offer document with the Sebi.

The offer for buyback should 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. Currently,there are two ways by which a company can come out with a buyback open market and tender offer. While in open market offer firms 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 the issue. The shares proposed to be bought back shall be divided in to two categories reserved category for small shareholders and the general category for other shareholders,Sebi said.