Regulation 4 - Conditions and requirements for buy-back of shares and specified securities - Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018

Conditions and requirements for buy-back of shares and specified securities: 4. (i) The maximum limit of any buy-back shall be twenty-five per cent or less of the aggregate of paid-up capital and free reserves of the company 1 [ 4 [ based on the standalone or consolidated financial statements of the company, whichever sets out a lower amount ]] : 5 [Explanation : In respect of the number of equity shares bought back in any financial year, the maximum limit shall be twenty-five per cent and be construed with respect to the total paid-up equity share capital of the company in that financial year. ] 2 [ (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 6 [ the standalone or consolidated financial statements of the company, whichever 9 [ is lower ]] : 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 6 [ the standalone or consolidated financial statements of the company, whichever 10 [ is lower ]] , 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 6:1 on standalone basis. ] (iii) All shares or other specified securities for buy-back shall be fully paid-up. (iv) A company may buy-back its shares or other specified securities by any one of the following methods: a) from the existing share holders or other specified securities holders on a proportionate basis through the tender offer 11 [ : ] 12 [ Provided that in case any member of the promoter / promoter group has declared its intention to not participate in the buy-back, the shares held by such member of the promoter / promoter group shall not be considered for computing the entitlement ratio. ] b) from the open market through- i) book-building process, ii) stock exchange; 7 [ ****** ] 3 [ 8 [Provided that the buy-back from the open market through stock exchanges, based on the standalone or consolidated financial statements of the company, whichever sets out a lower amount, shall be less than:- (i) fifteen per cent of the paid up capital and free reserves of the company till March 31, 2023; (ii) ten per cent of the paid up capital and free reserves of the company till March 31, 2024; (iii) five per cent of the paid up capital and free reserves of the company till March 31, 2025: Provided further that buy-back from the open market through the stock exchange shall not be allowed with effect from April 1, 2025. ]] (v) A company shall not buy-back its shares or other specified securities so as to delist its shares or other specified securities from the stock exchange. (vi) A company shall not buy-back its shares or other specified securities from any person through negotiated deals, whether on or off the stock exchange or through spot transactions or through any private arrangement. (vii) A company shall not make any offer of buy-back within a period of one year reckoned from the date of expiry of buyback period of the preceding offer of buy-back, if any. (viii) A company shall not allow buy-back of its shares unless the consequent reduction of its share capital is effected. (ix) A company may undertake a buy-back of its own shares or other specified securities out of- (a) its free reserves; (b) the securities premium account; or (c) the proceeds of the issue of any shares or other specified securities: Provided that no such buy-back shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities. (x) No company shall directly or indirectly purchase its own shares or other specified securities: (a) through any subsidiary company including its own subsidiary companies; (b) through any investment company or group of investment companies; or (c) if a default is made by the company in the repayment of deposits accepted either before or after the commencement of the Companies Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any financial institution or banking company: Provided that the buy-back is not prohibited, if the default is remedied and a period of three years has lapsed after such default ceased to subsist. ************** NOTES:- 1. Inserted vide NOTIFICATION No. SEBI/LAD-NRD/GN/2019/33 dated 19-09-2019 2. Substituted vide NOTIFICATION No. SEBI/LAD-NRD/GN/2019/33 dated 19-09-2019 before it was read as (ii) The ratio of the aggregate of secured and unsecured debts owed by the company after buy-back shall not be more than twice the paid-up capital and free reserves. 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. 3. Substituted vide NOTIFICATION No. SEBI/LAD-NRD/GN/2019/33 dated 19-09-2019 before it was read as Provided that no offer of buy-back for fifteen per cent or more of the paid up capital and free reserves of the company shall be made from the open market. 4. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/120 dated 07-02-2023 w.e.f. thirtieth day from the date of their publication in the Official Gazette before it was read as, based on both standalone and consolidated financial statements of the company 5. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/120 dated 07-02-202 w.e.f. thirtieth day from the date of their publication in the Official Gazette before it was read as, Explanation: In respect of the buy-back of equity shares in any financial year, the reference to twenty-five per cent in this regulation shall be construed with respect to its total paid-up equity capital in that financial year; 6. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/120 dated 07-02-2023 w.e.f. thirtieth day from the date of their publication in the Official Gazette before it was read as, both standalone and consolidated financial statements of the company 7. Omitted vide Notification No. SEBI/LAD-NRO/GN/2023/120 dated 07-02-2023 w.e.f. thirtieth day from the date of their publication in the Official Gazette before it was read as, c) from odd-lot holders: 8. Substituted vide Notification No. SEBI/LAD-NRO/GN/2023/120 dated 07-02-2023 w.e.f. thirtieth day from the date of their publication in the Official Gazette before it was read as, 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. 9. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/210 dated 20-11-2024 before it was read as, sets out a lower amount 10. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/210 dated 20-11-2024 before it was read as, sets out a lower amount 11. Substituted vide Notification No. SEBI/LAD-NRO/GN/2024/210 dated 20-11-2024 before it was read as, ; 12. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/210 dated 20-11-2024