Regulation 20 - Escrow account for open market buy-back through stock exchange - Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018

Escrow account for open market buy-back through stock exchange: 20. (i) The company shall, 1 [ within two working days of the public announcement ] , create an escrow account towards security for performance of its obligations under these regulations, and deposit in escrow account 25 per cent of the amount earmarked for the buy-back as specified in the resolution of the board of directors or the special resolution, as the case may be. (ii) The escrow account referred to in sub-regulation (i) may be 2 [ subject to appropriate margin as specified by the Board, ] in the form of,- a) cash deposited with any scheduled commercial bank; or b) bank guarantee issued in favour of the merchant banker by any scheduled commercial bank. 2 [ (c) deposit of frequently traded and freely transferable equity shares or other freely transferable securities with appropriate margin with the merchant banker; or (d) government securities; or (e) units of mutual funds invested in gilt funds and overnight schemes; or (f) a combination of the above. ] Explanation: The cash component of the escrow account may be maintained in terms of Explanation to clause (c) of sub-regulation (xi) of regulation 9 . (iii) For such part of the escrow account as is in the form of a cash deposit with a scheduled commercial bank, the company shall while opening the account, empower the merchant banker to instruct the bank to make payment of the amounts lying to the credit of the escrow account, to meet the obligations arising out of the buy-back. (iv) For such part of the escrow account as is in the form of a bank guarantee: a) the same shall be in favour of the merchant banker and shall be kept valid for a period of 3 [ thirty working days ] after the expiry of buyback period of the offer or till the completion of all obligations under these regulations, whichever is later. b) the same shall not be returned by the merchant banker till completion of all obligations under the regulations. (v) Where part of the escrow account is in the form 4 [ other than cash ] , the company shall deposit with a scheduled commercial bank, in cash, a sum of at least 2.5 per cent of the total amount earmarked for buy-back as specified in the resolution of the board of directors or the special resolution, as the case may be, as and by way of security for fulfillment of the obligations under the regulations by the company. (vi) The escrow amount may be released for making payment to the shareholders subject to at least 2.5 per cent of the amount earmarked for buy-back as specified in the resolution of the board of directors or the special resolution, as the case may be, remaining in the escrow account at all points of time. (vii) On fulfilling the obligation specified in regulation 15 , the amount and the guarantee remaining in the escrow account, if any, shall be released to the company. (viii) In the event of non-compliance with regulation 15 , the Board may direct the merchant banker to forfeit the escrow account, subject to a maximum of 2.5 per cent of the amount earmarked for buy-back as specified in the resolution of the board of directors or the special resolution, as the case may be, except in cases where,- a) volume weighted average market price (VWAMP) of the shares or other specified securities of the company during the buy-back period was higher than the buy-back price as certified by the Merchant banker based on the inputs provided by the Stock Exchanges. b) sell orders were inadequate despite the buy orders placed by the company as certified by the Merchant banker based on the inputs provided by the Stock Exchanges. c) such circumstances existed which were beyond the control of the company and in the opinion of the Board merit consideration. (ix) In the event of forfeiture for non-fulfillment of obligations specified in sub-regulation (viii) of this regulation, the amount forfeited shall be deposited in the Investor Protection and Education Fund of Securities and Exchange Board of India. **************** NOTES:- 1. 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:- before opening of the offer . 2. 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. 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:- thirty days 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:- of a bank guarantee