Regulation 9 - Offer procedure - Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018

Offer procedure 9. (i) A company making a buy-back offer shall announce a record date in the public announcement for the purpose of determining the entitlement and the names of the security holders, who are eligible to participate in the proposed buy-back offer. (ii) The letter of offer along with the tender form shall be dispatched to the securities holders who are eligible to participate in the buy-back offer 1 [ ****** ] . 2 [Explanation: The public announcement shall disclose that the dispatch of the letter of offer, shall be through electronic mode in accordance with the provisions of the Companies Act, within two working days from the record date and that in the case of receipt of a request from any shareholder to receive a copy of the letter of offer in physical form, the same shall be provided. ] (iii) Even if an eligible public shareholder does not receive the tender offer/offer form, he may participate in the buy-back offer and tender shares in the manner as provided by the Board. (iv) An unregistered shareholder may also tender his shares for buy-back by submitting the duly executed transfer deed for transfer of shares in his name, along with the offer form and other relevant documents as required for transfer, if any. (v) The date of the opening of the offer shall be not later than 3 [ four working days from the record date. ] (vi) The offer for buy-back shall remain open for a period of 4 [ five ] working days. (vii) The company shall facilitate tendering of shares by the shareholders and settlement of the same, through the stock exchange mechanism in the manner as provided by the Board. (viii) The company shall accept shares or other specified securities from the securities holders on the basis of their entitlement as on record date. (ix) The shares proposed to be bought back shall be divided into two categories; (a) reserved category for small shareholders and (b) the general category for other shareholders, and the entitlement of a shareholder in each category shall be calculated accordingly. Explanation: Holdings of multiple demat accounts would be clubbed together for identification of small shareholder if sequence of Permanent Account Number for all holders is matching. Similarly, in case of physical shareholders, if the sequence of names of joint holders is matching, holding under such folios should be clubbed together for identification of small shareholder. (x) After accepting the shares or other specified securities tendered on the basis of entitlement, shares or other specified securities left to be bought back, if any in one category shall first be accepted, in proportion to the shares or other specified securities tendered over and above their entitlement in the offer by securities holders in that category and thereafter from securities holders who have tendered over and above their entitlement in other category. (xi) Escrow account (a) The company shall, 5 [ within two working days of the public announcement ] as and by way of security for performance of its obligations under the regulations, 6 [ ****** ] , deposit in an escrow account such sum as specified in clause (b); (b) The escrow amount shall be payable in the following manner: (i) if the consideration payable does not exceed Rs. 100 crores; 25 per cent of the consideration payable; (ii) if the consideration payable exceeds Rs. 100 crores; 25 per cent upto Rs. 100 crores and 10 per cent thereafter. (c) The escrow account referred to in this regulation shall 5 [ subject to appropriate margin as specified by the Board, ] consist of, 7 [ (i) cash including bank deposits deposited with any scheduled commercial bank ] or (ii) bank guarantee 8 [ issued in favour of the merchant banker by any scheduled commercial bank ] or (iii) deposit of 9 [ frequently traded and freely transferable equity shares or other freely transferable securities, ] or 5 [ (iiia) government securities, or (iiib) units of mutual funds invested in gilt funds and overnight schemes, or ] (iv) a combination of 10 [ above ] . Explanation: The cash component of the escrow account may be maintained in an interest bearing account, provided that the merchant banker ensures that the funds are available at the time of making payment to shareholders. (d) Where the escrow account consists of deposit with a scheduled commercial bank, the company shall, while opening the account, empower the merchant banker to instruct the bank to make payment the amount lying to the credit of the escrow account, as provided in the regulations. (e) Where the escrow account consists of a bank guarantee, such bank guarantee shall be in favour of the merchant banker and shall be valid until 11 [ thirty working days after the expiry of buy-back period or until the completion of all obligations under these regulations, whichever is later ] . 5 [Explanation : The bank guarantee shall not be returned by the merchant banker until the completion of all obligations under these regulations. ] (f) The company shall, in case the escrow account consists of securities, empower the merchant banker to realise the value of such escrow account by sale or otherwise and if there is any deficit on realisation of the value of the securities, the merchant banker shall be liable to make good any such deficit. (g) In case the escrow account consists of 12 [ ***** ] approved securities, these shall not be returned by the merchant banker till completion of all obligations under the regulations. 13 [ (h) Where part of the escrow account is in a form other than cash, the company shall deposit with a scheduled commercial bank, in cash, a sum of not less than two and half per cent of the total amount earmarked for buyback as specified in the resolution of the Board of Directors or the special resolution, as the case may be, as security for the fulfilment of its obligations under the regulations. ] (i) On payment of consideration to all the securities holders who have accepted the offer and after completion of all formalities of buy-back, the amount, guarantee and securities in the escrow, if any, shall be released to the company. (j) The Board in the interest of the securities holders may in case of non-fulfillment of obligations under the regulations by the company forfeit the escrow account either in full or in part. (xii) The amount forfeited under clause (j) may be distributed pro rata amongst the securities holders who accepted the offer and balance, if any, shall be utilised for investor protection. ************* NOTES:- 1. 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:- as per sub regulation (i), not later than five working days from the receipt of communication of comments from the Board. 2. 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:- Explanation: (a) Letter of Offer may also be dispatched through electronic mode in accordance with the provisions of the Companies Act. (b) On receipt of a request from any shareholder to receive a copy of the letter of offer in physical form, the same shall be provided. (c) The aforesaid shall be disclosed in the letter of offer. 3. 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:- five working days from the date of dispatch of the letter of offer. 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:- ten 5. Inserted 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. 6. 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:- on or before the opening of the offer 7. 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:- cash deposited with a scheduled commercial bank, 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:- in favour of the merchant banker 9. 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:- acceptable securities with appropriate margin, with the merchant banker 10. 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:- (i), (ii) and (iii) 11. 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:- thirty days after the expiry of buy-back period 12. 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:- bank guarantee or 13. 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:- (h) Where the escrow account consists of bank guarantee or deposit of approved securities, the company shall also deposit with the bank in cash a sum of at least one per cent of the total consideration payable, as and by way of security for fulfillment of the obligations under the regulations by the company.