Securities provided, buy-back from the open market
A Company intending to buy-back its securities specified from the open market shall do so in accordance with the provisions of this Chapter.
The specified securities buy-back from the open market may be in any one of the following methods.
a, through exchange of stock.
b, process of book-building.
Buy-back through stock exchange.
A company shall mentioned its buy-back securities through the exchange of stock as here under provided.
a, the resolution special referred to in regulation 5 or the passed resolution by the Board of Directors at its meeting as referred to in Regulation 5A shall specify the maximum price at which shall be made the buy-back.
b, the specified securities buy-back shall not be made from the promoters or persons in the company control.
c, the company shall appoint a merchant banker and make a public announcement to in regulation 8 as referred;
d, the public announcement shall be made at least seven days prior to the buy-back commencement;
e, the public announcement copy shall be made at least prior seven days to the buy-back commencement;
f, a public announcement copy shall be filed with the Board within two days of announcement such along with the specified fees in Schedule IV;
g, the buy-back shall be made only on the exchanges of stock with electronic trading facility;
h, the specified securities shall be made only through the order matching mechanism except ” all or none” order system matching;
i, the Company and the merchant banker shall give the stock exchange information on a daily basis regarding the securities specified purchased for buy-back and the same shall be published in a national daily;
j, the Company identity as a purchaser shall appear on the electronic screen when place an order.
Extinguishment of certificates.
The regulation provisions 12 pertaining to the extinguishment of certificates shall be applicable to mutatis mutandis.
Obligations of the company.
1, The company shall ensure that
a, the offer letter, the offer public announcement or any other circular, advertisement, brochure, publicity material or public notice referred to in clause(a) of sub-regulation (1) of Regulation 5A shall referred to in clause (a) of sub regulation (1) of Regulation 5A shall contain factual, true and information material and shall not contain any information misleading and must state that the company directors accept the information responsibility contained in such documents.
b, the company shall not issue any securities specified including by bonus way till the closure date of the offer made under these regulations.
c, the company shall pay the consideration by the way of cash only;
d, the company shall not with draw to buy-back offer after the offer letter draft is filed with the Board or announcement of public of the offer to buy-back offer is open.
2. No buy-back announcement of public shall be made during any scheme of amalgamation pend-ency or compromise or pursuant arrangement to the provisions of the Companies Act.
3. The company shall nominate a officer compliance and service investors centre for compliance with regulations of buy-back and to redress the investors grievances.
4. The security certificates particulars extinguished and destroyed shall be furnished to the exchanges of stock by the Company where the specified Company securities are listed within extinguishment seven days and the certificates destruction.
5. The company shall not buy-back the locked-in securities specified and non specified securities transferable till the lock-in pendency or till the securities specified become transferable.
7. The company shall within two days buy-back completion issue a advertisement of public in a national daily, disclosing inter alia:
i, specified securities number bought;
ii, price at which bought the securities specified;
iii, invested amount total in the buy-back;
iv, the security holders details from whom securities specified exceeding total specified securities one percent bought back; and
v, the capital structure consequent changes and the shareholding pattern before and after the buy-back.
8. The company in addition to these regulations shall comply with the buy-back provisions as contained in the companies Act and other laws applicable.
Obligations of the merchant banker.
The merchant banker shall ensure that
a, the company is able to implement the offer;
b, the relating provisions to escrow as referred account to in regulation 10 has been made;
c, firm arrangements for payment for monies to fulfill the obligations under the offer are in place;
d, the buy-back public announcement is made in terms of the regulations.
e, the offer letter has been filed of the regulations in terms.
f, the merchant banker shall furnish a due diligence certificate to the Board which shall accompany of offer the draft letter.g, Ensure the merchant banker compliance of section 77A and section 77B of the Companies Act, and any other rules or laws as may be in this regard applicable.
h, the merchant banker shall ensure section 77A compliance and section 77 B of the companies Act, and other laws or rules in this regard as may be applicable
i, upon fulfillment by the company of all obligations under the regulations, Inform the bank of the merchant banker, the merchant banker shall with whom the special amount or the escrow or special amount has been deposited or realize the company the balance amount;
j, the merchant banker shall send to the board a final report in the form specified within 15 days from the closure date of the buy-back offer.
Action against intermediaries.
The Board may, on the merchant banker failure to comply with the obligations or due diligence failing to observe initiate action against the merchant banker in terms of Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992.
The Board may on a register failure or a broker to comply with these regulations provisions or failing to observe due diligence initiate action against the registrar or the broker in terms of the applicable regulations to such intermediaries.
PROCEDURES AND PENALTIES
Order investigation to the power of Board.
The Board may, suo motu or upon received information by it, cause an investigation to made in accordance of the conduct and any person affairs associated with the buy-back process, by appointing the Board an officer.
Provided that no investigation shall be made except for the specified purposes in sub-regulation (2).
The referred purposes to in sub-regulation (1) namely the following:-
a, to ascertain whether there are circumstances any which would render any person guilty of having contravened any of these regulations or any issued directions there under;
b, to investigate into any contravention of the regulation any compliant, received from any investor, any other person or intermediary.
An passed order under sub-regulation (1) shall be sufficient authority for the officer investigating to undertake the investigation and of an authenticated copy of the order on production, the concerned person shall be bound to be carry out the imposed duty in regulation 23.
Duty to produce records, etc.
It shall be very person duty in accordance of whom an investigation has been ordered under regulation 22, to produce before the Investigation Officer, other documents and books in his custody or control and furnish him with such information’s and statements as the mentioned officer may need for the investigation purpose.
Without prejudice of the provisions sub-regulation (1) generality, shall such person-
a, extend to the reasonable facilities Investigating officer for examining any accounts, books and other documents in his control or custody (whether manually kept or in computer or in any other form) required reasonably for the investigation purposes;
b, to provide such investigating officer with such books copies, records and accounts which, in opinion of the Investigating officer, are relevant to the investigation or, as the case may be, allow him to take out thereof computer printouts.
c, to issue such co-operation and assistance as may be required in connection with the investigation and relevant information to furnish to such investigation by such Officer as may be sought.
3. The investigating officer shall for the investigation purpose, have the powers that are full,
a, of summoning and the persons attendance enforcing;
b, to orally examine and to record on oath the statement of the persons mentioned, any partner, any director, such person employee or member.
Submission of report to the Board.
The investigation officer shall, on the completion of investigation, after taking into account all facts that are relevant and circumstances, submit a report to the Board.
2,. On the report receipt under sub-regulation (1), such action by the board may initiate as it may be empowered to do so in the investors interests and the market securities.
Power to issue directions of the board.
The board may in the market securities in the interests and without prejudice to its right to begin action including prosecution of criminal by the Board under section 24th of the Act give such directions as it deems including fit:
a, directing the concerned persons not to deal further in securities in any manner particularly;
b, provisions of the concerned person from cancelling any of the securities bought back of the Companies Act in violation.
c, directing the concerned person to sell or divest the securities specified acquired in violation of these regulations of the provisions or any other regulations or law;
d, taking actions against registered intermediaries with Board in respect with the applicable regulations to it.
e, prohibiting the concerned persons, partners, directors, members, employees and such persons associates, from accessing the securities-market;
f, any disgorgement gains ill-gotten or profits or loss avoidance
g, restraining the Company further offer from making for buy-back.
In case insider trader is guilty of any person or manipulation market the concerned person shall be dealt with in respect with the provisions of securities and Exchange Board of India (Insider Trading) Regulations, 1992 and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to the securities Market) Regulations, 1995.
Power of board to remove difficulties.
To remove any difficulties of an application in order or the interpretation of the provisions of these Regulations, the Board shall have the power to issue directions through circular or guidance notes.
Any direction is issued provided by the Board in a specific case relating to application or interpretation of any provision of these Regulations, it shall be done only after affording a reasonable opportunity to the parties concerned and after recording reasons for the directions.
CONTENTS STATEMENT EXPLANATORY:
The explanatory statement for special resolution of the notice for shall buy-back, contain the following inter-alia:
1, the date of the board meeting at which the proposal for buy-back was approved by the Board of Directors of the Company;
2. The necessity for the buy-back.
3. The company may indicate to the notice in the explanatory statement that the general meeting shareholders may authorize the Board of Directors of the Company to adopt one of the referred in sub-regulation (1) of regulation 4 at the appropriate time.
4. The required maximum amount under the buy-back and the funds sources from which the buy-back would be financed;
5. The arriving basis at the buy-back price;
6. The securities number that the company proposes to buy-back;
7. The shareholding aggregate of the promoter and of the promoters directors, where the promoter of the company and of persons who are in company control as on the notice date convening the General meeting or the Board of directors the meeting;
8. aggregate number of purchased equity shares or sold by persons including mentioned persons in (a) above during a six months period preceding the date of the meeting of the board at which the buy-back was approved from date till the date of convening notice of the general meeting.
9. the maximum and the minimum price at which purchases and sales referred to in (b) above were made along with dates that are relevant;
10. The promoters intention and persons in control of the company to tender securities specified for buy-back indicating the specified number securities, acquisition details with price and dates.
a confirmation that there are subsisting no defaults of repayment in deposits, debentures redemption or shares of preference or term loans to any banks or financial institutions repayment.
x. a confirmation that the Board of Directors has made an enquiry full into the affairs and the company prospectus and that they have formed the opinion-