Regulation 10 - Escrow account - Securities and Exchange Board of India (Buy Back Of Securities) Regulations, 1998

Escrow account 10. (1) The company shall as and by way of security for performance of its obligations under the regulations, on or before the opening of the offer deposit in an escrow account such sum as specified in sub-regulation (2). (2) The escrow amount shall be payable in the following manner,- (i) if the consideration payable does not exceed ₹ 100 crores - 25 per cent of the consideration payable; (ii) if the consideration payable exceeds ₹ 100 crores - 25 per cent upto ₹ 100 crores and 10 per cent thereafter. (3) The escrow account referred in sub-regulation (1) shall consist of, (a) cash deposited with a scheduled commercial bank, or (b) bank guarantee in favour of the merchant banker, or (c) deposit of acceptable securities with appropriate margin, with the merchant banker, or (d) a combination of (a), (b) and (c) above. (4) 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 issue a banker s cheque or demand draft for the amount lying to the credit of the escrow account, as provided in the regulations. (5) Where the escrow account consists of bank guarantee, such bank guarantee shall be in favour of the merchant banker and shall be valid until thirty days after the closure of the offer. (6) 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. (7) In case the escrow account consists of bank guarantee or approved securities, these shall not be returned by the merchant banker till completion of all obligations under the regulations. (8) 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 fulfilment of the obligations under the regulations by the company. (9) On payment of consideration to all the 1 [security-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. (10) The Board in the interest of the 2 [security-holders] may in case of non-fulfilment of obligations under the regulations by the company forfeit the escrow account either in full or in part. (11) The amount forfeited under sub-regulation (10) may be distributed pro rata amongst the 3 [security-holders] who accepted the offer and balance, if any, shall be utilised for investor protection. ******* 1 Substituted for the word shareholders by the SEBI (Buy-back of Securities) (Amendment) Regulations, 1999, w.e.f. 21-09-1999. 2 Substituted for the word shareholders by the SEBI (Buy-back of Securities) (Amendment) Regulations, 1999, w.e.f. 21-09-1999. 3 Substituted for the word shareholders by the SEBI (Buy-back of Securities) (Amendment) Regulations, 1999, w.e.f. 21-09-1999.