Home / Business and Economy / Sebi Overhauls Buyback Rules, Eases MF Borrowing
Sebi Overhauls Buyback Rules, Eases MF Borrowing
16 Jun
Summary
- Sebi to potentially reintroduce stock exchange routes for buybacks.
- Mutual funds may see relaxed intraday borrowing norms.
- New tax framework aims for fairer shareholder participation and taxation.
The Securities and Exchange Board of India (Sebi) is preparing to significantly revise its framework for company share buybacks. A key proposal expected to be considered involves reintroducing the stock exchange route for share repurchases, a mechanism that was previously phased out. This move, alongside potentially waiving the requirement to appoint merchant bankers, aims to simplify buyback processes and reduce associated costs for businesses.
Furthermore, Sebi is looking to enhance the operational flexibility of mutual funds. The board may approve relaxing curbs on intraday borrowing, allowing fund houses to utilize these facilities for a wider array of cash management purposes beyond just meeting investor redemptions. This adjustment is expected to provide greater liquidity management tools for mutual funds.
Under the proposed buyback framework, a revised taxation approach is anticipated. Public shareholders would be subject to capital gains tax on shares tendered, aligning with standard market sales. This contrasts with previous regulations where companies bore the buyback tax, leading to potentially uneven outcomes. Additional safeguards, such as electronic shareholder intimation and promoter transaction restrictions, are also planned.
