A Guide to SEBI (Buy-Back of Securities) Regulations, 2018

A Guide to SEBI (Buy-Back of Securities) Regulations, 2018

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The Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 regulates the buy-back of securities. 

History of the Regulations

The Securities and Exchange Board of India (Buy- Back of Securities) Regulations, 2018 was enacted by the Securities and Exchange Board of India (SEBI) by the powers conferred under Sections 11 and 30 of the SEBI Act, 1992 and Section 68 of the Companies Act, 2013. 

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Securities and Exchange Board of India (Buy- Back of Securities) Regulations, 2018


1. Important Definitions

Associate includes a person-

  1. who directly or indirectly by himself or in combination with relatives, exercise control over the company, or
  2. whose employee, officer or director is also a director, officer or employee of the company.

Buyback Period means the period between the date of board of directors resolution or date of declaration of results of the postal ballot for special resolution, as the case may be, to authorize buyback of shares of the company and the date on which the payment of consideration to shareholders who have accepted the buyback offer is made.

Control has the same meaning as assigned under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. 

Company means a company as defined under the Companies Act, whose shares or other specified securities are listed on a stock exchange and which buys or intends to buy such shares or other specified securities in accordance with these regulations.

Insider means an insider as defined under the SEBI (Prohibition of Insider Trading) Regulations, 2015. 

Odd Lots mean the lots of shares or other specified securities of a company, whose shares are listed on a recognised stock exchange, which are smaller than such marketable lots, as may be specified by the stock exchange.

Promoter means a promoter as defined under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. 

Small Shareholder means a shareholder of a company, who holds shares or other specified securities whose market value, on the basis of closing price of shares or other specified securities, on the recognised stock exchange in which highest trading volume in respect of such securities, as on record date is not more than INR 2 lakhs.

Specified Securities includes employees’ stock option or other securities as may be notified by the Central Government from time to time.

Tender Offer means an offer by a company to buy-back its own shares or other specified securities through a letter of offer from the holders of the shares or other specified securities of the company.

Unpublished Price Sensitive Information has the same meaning as assigned under the SEBI (Prohibition of Insider Trading) Regulations, 2015. 


2. Conditions of Buy- Back

  1. The maximum limit of any buy-back has to be 25% or less of the aggregate of paid-up capital and free reserves of the company. In respect of the buy-back of equity shares in any financial year, the reference to 25% in this regulation has to be construed with respect to its total paid-up equity capital in that financial year.
  2. The ratio of the aggregate of secured and unsecured debts owed by the company after buy-back cannot be more than twice the paid-up capital and free reserves. If a higher ratio of the debt to capital and free reserves for the company has been notified under the Companies Act, 2013, the same will prevail over this.
  3. All shares or other specified securities for buy-back have to be fully paid- up.
  4. A company may buy-back its shares or other specified securities from the existing shareholders or other specified securities holders on a proportionate basis through the tender offer or from the open market through book-building process, stock exchange or from odd-lot holders. It is noteworthy that no offer of buy-back for 15% or more of the paid up capital and free reserves of the company has to be made from the open market.
  5. A company cannot buy-back its shares or other specified securities so as to delist its shares or other specified securities from the stock exchange.
  6. A company cannot buy-back its shares or other specified securities from any person through negotiated deals, whether on or off the stock exchange or through spot transactions or through any private arrangement.
  7. A company cannot make any offer of buy-back within a period of 1 year reckoned from the date of expiry of buyback period of the preceding offer of buy-back, if any.
  8. A company cannot allow buy-back of its shares unless the consequent reduction of its share capital is effected.
  9. A company may undertake a buy-back of its own shares or other specified securities out of its free reserves, the securities premium account or the proceeds of the issue of any shares or other specified securities. No such buy-back can be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.
  10. No company can directly or indirectly purchase its own shares or other specified securities through any subsidiary company including its own subsidiary companies or through any investment company or group of investment companies or if a default is made by the company in the repayment of deposits accepted either before or after the commencement of the Companies Act, interest payment thereon, redemption of debentures or preference shares or payment of dividend to any shareholder, or repayment of any term loan or interest payable thereon to any financial institution or banking company (Provided that the buy-back is not prohibited, if the default is remedied and a period of 3 years has lapsed after such default ceased to subsist).

3. General Compliance and Filing Requirements for Buy- Back

  1. The company cannot authorise any buy-back (whether by way of tender offer or from open market or odd lot) unless the buy-back is authorised by the company’s articles or a special resolution has been passed at a general meeting of the company authorising the buy-back. Nothing contained in this clause can apply to a case where the buy-back is, 10% or less of the total paid-up equity capital and free reserves of the company and such buy-back has been authorised by the Board of Directors by means of a resolution passed at its meeting.
  2. Every buy-back has to be completed within a period of 1 year from the date of passing of the special resolution at a general meeting, or the resolution passed by the Board of Directors of the company, as the case may be.
  3. The company has to, after expiry of the buy-back period, file with the Registrar of Companies and the Board, a return containing such particulars relating to the buy-back within 30 days of such expiry, in the format as specified in the Companies (Share Capital and Debentures) Rules, 2014.
  4. Where a special resolution is required for authorizing a buy-back, the explanatory statement to be annexed with the notice for the general meeting pursuant to Section 102 of the Companies Act has to contain mandatory disclosures mentioned there and the following disclosures have to be made including disclosures under the Companies Act of a full and complete disclosure of all material facts, the necessity for the buy-back, the class of shares or securities intended to be purchased
    under the buy-back,  the amount to be invested under the buy-back and the time-limit for completion of buy-back, additional disclosures under these regulations and where the buy-back is through tender offer from existing securities holders, the explanatory statement has to contain the following additional disclosures containing the maximum price at which the buy-back of shares or other specified securities has to be made and whether the Board of Directors of the company is being authorised at the general meeting to determine subsequently the specific price at which the buy-back may be made at the appropriate time and if the promoter intends to offer his shares or other specified securities, the quantum of shares or other specified securities proposed to be tendered and the details of their transactions and their holdings for the last 6 months prior to the passing of the special resolution for buy-back including information of number of shares or other specified securities acquired, the price and the date of acquisition.
  5. A copy of the resolution passed at the general meeting under the Companies Act has to be filed with the Board and the stock exchanges where the shares or other specified securities of the company are listed, within 7 days from the date of passing of the resolution.
  6. Where the buy-back is from the open market either through the stock exchange or through book building, the resolution of the Board of Directors has to specify the maximum price at which the buy-back can be made.
  7. A company, authorized by a resolution passed by the Board of Directors at its meeting to buy-back its shares or other specified securities under the Companies Act, have to file a copy of the resolution, with the Board and the stock exchanges, where the shares or other specified securities of the company are listed, within 2 working days of the date of the passing of the resolution.
  8. No insider is permitted to deal in shares or other specified securities of the company on the basis of unpublished price sensitive information relating to buy-back of shares or other specified securities of the company.

4. Buy- Back Through Tender Offer

  1. A company may buy-back its shares or other specified securities from its existing securities holders on a proportionate basis in accordance with the provisions of this Chapter (Provided that 15% of the number of securities which the company proposes to buy-back or number of securities entitled as per their shareholding, whichever is higher, has to be reserved for small shareholders.
  2. The company which has been authorised by a special resolution or a resolution passed by the Board of Directors, as the case may be, has to make a public announcement within 2 working days from the date of declaration of results of the postal ballot for special resolution or Board of Directors resolution in at least one English national daily newspaper, one Hindi national daily newspaper and one Regional language daily newspaper, all with wide circulation at the place where the registered office of the company is situated and the said public announcement has to contain all the material information as specified in Schedule II. A copy of the public announcement along with the soft copy, has to also be submitted by the Board simultaneously, through a merchant banker.
  3. The company has to, within 5 working days of the public announcement file a draft letter of offer, along with a soft copy, containing disclosures as specified in Schedule III through a merchant banker who is not associated with the company, a declaration of solvency in specified form and in a manner provided under the Companies Act and fees as specified in Schedule V. The Board may provide its comments on the draft letter of offer not later than 7 working days of the receipt of the draft letter of offer.

4.1 Offer Procedure

  1. A company making a buy-back offer has to 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.
  2. The letter of offer along with the tender form has to be dispatched to the securities holders who are eligible to participate in the buy-back offer not later than 5 working days from the receipt of communication of comments from the Board. Letter of offer may also be dispatched through electronic mode in accordance with the provisions of the Companies Act. On receipt of a request from any shareholder to receive a copy of the letter of offer in physical form, the same has to be provided. The aforesaid has to be disclosed in the letter of offer.
  3. 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.
  4. 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.
  5. The date of the opening of the offer cannot be later than 5 working days from the date of dispatch of the letter of offer.
  6. The offer for buy-back has to remain open for a period of 10 working days.
  7. The company has to 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.
  8. The company has to accept shares or other specified securities from the securities holders on the basis of their entitlement as on record date.
  9. The shares proposed to be bought back have to be divided into a reserved category for small shareholders and the general category for other shareholders, and the entitlement of a shareholder in each category has to be calculated accordingly.
  10. 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 has to 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.
  11. The company has to, 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, if the consideration payable does not exceed INR 100 crores, 25% of the consideration payable, if the consideration payable exceeds INR 100 crores, 25% upto INR 100 crores and 10% thereafter.
  12. The escrow account referred to in this regulation has to consist of cash deposited with a scheduled commercial bank or bank guarantee in favour of the merchant banker or deposit of acceptable securities with appropriate margin, with the merchant banker or a combination of all the aspects specified here. 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.
  13. Where the escrow account consists of deposit with a scheduled commercial bank, the company has to, 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.
  14. Where the escrow account consists of a bank guarantee, such bank guarantee has to be in favour of the merchant banker and has to be valid until 30 days after the expiry of the buy-back period.
  15. The company has to, 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 is liable to make good any such deficit.
  16. In case the escrow account consists of bank guarantee or approved securities, these cannot be returned by the merchant banker till completion of all obligations under the regulations.
  17. Where the escrow account consists of bank guarantee or deposit of approved securities, the company has to also deposit with the bank in cash a sum of at least 1% of the total consideration payable, as and by way of security for fulfillment of the obligations under the regulations by the company.
  18. 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, has to be released to the company.
  19. 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. The amount forfeited may be distributed pro rata amongst the securities holders who accepted the offer and balance, if any, has to be utilised for investor protection.

4.2 Extinguishment of Certificate and Closure Compliances

  1. The company has to extinguish and physically destroy the securities certificates, so bought back in the presence of a registrar to issue or the merchant banker and the Statutory auditor within 15 days of the date of acceptance of the shares or other specified securities (Provided that the company has to ensure that all the securities bought-back, are extinguished within 7 days of expiry of buy-back period. The aforesaid period of 15 days can, in no case extend beyond 7 days of expiry of buy-back period.
  2. The shares or other specified securities offered for buy-back, if already dematerialised, has to be extinguished and destroyed in the manner specified under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, and the bye-laws, the circulars and guidelines framed thereunder.
  3. The company has to furnish a certificate to the Board certifying compliance, duly certified and verified by the registrar and whenever there is no registrar, by the merchant banker, 2 directors of the company, one of whom has to be a managing director, where there is one and the Statutory auditor of the company. This certificate has to be furnished to the Board within 7 days of extinguishment and destruction of the certificates.
  4. The company has to furnish the particulars of the securities certificates extinguished and destroyed, to the stock exchanges where the shares of the company are listed within 7 days of extinguishment and destruction of the certificates.
  5. Where a company buys back its shares or other specified securities under these regulations, it has to maintain a register of the shares or securities so bought, the consideration paid for the shares or securities bought back, the date of cancellation of shares or securities, the date of extinguishing and physically destroying the shares or securities and such other particulars as may be prescribed under the Companies Act.
  6. The company has to, immediately, after the date of closure of the offer, open a special account with a banker to an issue, registered with the Board and deposit therein, such sum as would, together with 90% of the amount lying in the escrow account, make-up the entire sum due and payable as consideration for buy-back in terms of these regulations and for this purpose, may transfer the funds from the escrow account.
  7. The company has to complete the verification of offers received and make payment of consideration to those holders of securities whose offer has been accepted and return the remaining shares or other specified securities to the securities holders within 7 working days of the closure of the offer.

5. Buy- Back from the Open Market

  1. A company intending to buy-back its shares or other specified securities from the open market has to do it in accordance with the provisions of these regulations.
  2. The buy-back of shares or other specified securities from the open market may be either through a stock exchange or a book-building process.
  3. The company has to ensure that at least 50% 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, is utilized for buying-back shares or other specified securities.

5.1 Buy- back through Stock Exchange

  1. The buy-back has to be made only on stock exchanges having nationwide trading terminals.
  2. The buy-back of the shares or other specified securities through the stock exchange has to not be made from the promoters or persons in control of the company.
  3. The buy-back of shares or other specified securities has to be made only through the order matching mechanism.
  4. The company has to appoint a merchant banker and make a public announcement pertaining to the tender offer.
  5. The public announcement has to be made within 2 working days from the date of passing the Board of Directors resolution or date of declaration of results of the postal ballot for special resolution, as relevant and has to contain disclosures as specified in Schedule IV.
  6. Simultaneously with the issue of such public announcement, the company has to file a copy of the public announcement with the Board along with the fees specified in Schedule V.
  7. The public announcement has to also contain disclosures regarding details of the brokers and stock exchanges through which the buy-back of shares or other specified securities would be made. In case of the buy-back from open market, no letter of offer is required to be filed with the Board.
  8. The identity of the company as a purchaser has to appear on the electronic screen when the order is placed.
  9. The buy-back offer has to open no later than 7 working days from the date of public announcement and has to close within 6 months from the date of opening of the offer.
  10. The company has to submit the information regarding the shares or other specified securities bought-back, to the stock exchange on a daily basis in such form as may be specified by the Board and the stock exchange has to upload the same on its official website immediately.
  11. The company has to upload the information regarding the shares or other specified securities bought-back on its website on a daily basis.
  12. A company may buy-back its shares or other specified securities in physical form in the open market through stock exchange by a separate window created by the stock exchange, which has to remain open during the period of buy-back, for buy-back of shares or other specified securities in physical form, from eligible shareholders holding physical shares through the separate window, only after verification of the identity proof and address proof by the broker and the price at which the shares or other specified securities are bought back has to be the volume weighted average price of the shares or other specified securities bought-back, other than in the physical form, during the calendar week in which such shares or other specified securities were received by the broker.
  13. The company has to, before opening of the offer, create an escrow account towards security for performance of its obligations under these regulations, and deposit in escrow account 25% 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.
  14. The escrow account may be in the form of cash deposited with any scheduled commercial bank or bank guarantee issued in favour of the merchant banker by any
    scheduled commercial bank.
  15. For such part of the escrow account as is in the form of a cash deposit with a scheduled commercial bank, the company has to, 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.
  16. For such part of the escrow account as is in the form of a bank guarantee, the same has to be in favour of the merchant banker and has to be kept valid for a period of 30 days after the expiry of buy- back period of the offer or till the completion of all obligations under these regulations, whichever is later and the same cannot be returned by the merchant banker till completion of all obligations under the regulations.
  17. Where part of the escrow account is in the form of a bank guarantee, the company has to deposit with a scheduled commercial bank, in cash, a sum of at least 2.5% 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.
  18. The escrow amount may be released for making payment to the shareholders subject to at least 2.5%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.
  19. On fulfilling the obligation specified in Regulation 15, the amount and the guarantee remaining in the escrow account, if any, has to be released to the company.
  20. 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% 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 volume weighted average market price 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, 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 and such circumstances existed which were beyond the control of the company and in the opinion of the Board merit consideration. In the event of forfeiture for non-fulfillment of obligations, the amount forfeited has to be deposited in the Investor Protection and Education Fund of Securities and Exchange Board of India.

5.2 Buy- back through Book Building

  1. The special resolution or the Board of Directors resolution, as the case may be, can be passed in accordance with Regulation 5.
  2. The company has to appoint a merchant banker and make a public announcement. The disclosures in the public announcement have to be in accordance with Schedule II. The public announcement has to be made at least 7 days prior to the commencement of buy-back.
  3. The deposit in the escrow account has to be made before the date of the public announcement. The amount to be deposited in the escrow account has to be determined with reference to the maximum price as specified in the public announcement.
  4. A copy of the public announcement has to be filed with the Board within 2 days of such announcement along with the fees as specified in Schedule V.
  5. The public announcement has to also contain the detailed methodology of the book-building process, the manner of acceptance, the format of acceptance to be sent by the securities holders pursuant to the public announcement and the details of bidding centres.
  6. The book-building process has to be made through an electronically linked transparent facility.
  7. The number of bidding centers has to not be less than 30 and there has to be at least one electronically linked computer terminal at all the bidding centers.
  8. The offer for buy-back has to remain open to the securities holders for a period not less than 15 days and not exceeding 30 days.
  9. The merchant banker and the company have to determine the buy-back price based on the acceptances received.
  10. The final buy-back price, which has to be the highest price accepted has to be paid to all holders whose shares or other specified securities have been accepted for buy-back.
  11. The provisions pertaining to verification of acceptances and pertaining to opening of special account and payment of consideration has to be applicable mutatis mutandis.
  12. The provisions pertaining to extinguishment of certificates for tender offer have to be applicable mutatis mutandis to the buy-back through book building.

6. Obligations of the Company for all Buy- Back Procedures

  1. The company has to ensure that the letter of offer, the public announcement of the offer or any other advertisement, circular, brochure, publicity material has to contain true, factual and material information and does not contain any misleading information and must state that the directors of the company accept the responsibility for the information contained in such documents.
  2. The company cannot issue any shares or other specified securities including by way of bonus till the date of expiry of buy- back period for the offer made under these regulations.
  3. The company has to pay the consideration only by way of cash.
  4. The company cannot withdraw the offer to buy-back after the draft letter of offer is filed with the Board or public announcement of the offer to buy-back is made.
  5. The company has to ensure that the promoters or his/their associates do not deal in the shares or other specified securities of the company in the stock exchange or off-market, including inter- se transfer of shares among the promoters during the period from the date of passing the resolution of the Board of Directors or the special resolution, as the case may be, till the closing of the offer.
  6. The company cannot raise further capital for a period of 1 year from the expiry of buy- back period, except in discharge of its subsisting obligations.
  7. No public announcement of buy-back can be made during the pendency of any scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act.
  8. The company has to nominate a compliance officer and investors service centre for compliance with the buy-back regulations and to redress the grievances of the investors.
  9. The particulars of the security certificates extinguished and destroyed have to be furnished by the company to the stock exchanges where the shares or other specified securities of the company are listed within 7 days of extinguishment and destruction of the certificates.
  10. The company cannot buy-back the locked-in shares or other specified securities and non-transferable shares or other specified securities till the pendency of the lock-in or till the shares or other specified securities become transferable.
  11. The company has to within 2 days of expiry of buy-back period issue a public advertisement in a national daily newspaper, disclosing the number of shares or other specified securities bought, price at which the shares or other specified securities bought, total amount invested in the buy-back, details of the securities holders from whom shares or other specified securities exceeding 1% of total shares or other specified securities were bought back and the consequent changes in the capital structure and the
    shareholding pattern after and before the buy-back.
  12. The company in addition to these regulations, has to comply with the provisions of buy-back as contained in the Companies Act and other applicable laws.

7. Obligations of the Merchant Banker

  1. The merchant banker has to ensure that the company is able to implement the offer.
  2. The merchant banker has to ensure that the provision relating to escrow account has been complied with.
  3. The merchant banker has to ensure that the firm arrangements for monies for payment to fulfill the obligations under the offer are in place.
  4. The merchant banker has to ensure that the public announcement of buy-back is made in terms of the regulations.
  5. The merchant banker has to ensure that the letter of offer has been filed in terms of the regulations. 
  6. The merchant banker has to ensure that a due diligence certificate along with the draft letter of offer has been furnished to the Board.
  7. The merchant banker has to ensure that the contents of the public announcement of offer as well as the letter of offer are true, fair and adequate and quoting the source wherever necessary.
  8. The merchant banker has to ensure that due compliance of Sections 68, 69 and 70 of the Companies Act and any other laws or rules as may be applicable in this regard
    has been made.
  9. The merchant banker has to ensure that the bank with whom the escrow or special amount has been deposited releases the balance amount to the company only upon fulfillment of all obligations by the company under the regulations.
  10. The merchant banker has to ensure that a final report is submitted to the Board in the form specified within 15 days from the date of expiry of buy- back period.

8. Schedule I

Contents of the Explanatory Statement

1. Date of the Board meeting at which the proposal for buy-back was approved by the Board of Directors of the company.

2. Necessity for the buy-back.

3. Maximum amount required under the buy-back and its percentage of the total paid up capital and free reserves.

4.  Maximum price at which the shares or other specified securities are proposed be bought back and the basis of arriving at the buy-back price.

5.Maximum number of securities that the company proposes to buy- back.

6.  Method to be adopted for buy-back as referred to in sub-regulation (iv) of regulation 4.

7. The aggregate shareholding of the promoter and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company as on the date of the notice convening the General Meeting or the Meeting of the Board of Directors.

8. The aggregate number of shares or other specified securities purchased or sold by persons including persons mentioned above from a period of 6 months preceding the date of the Board Meeting at which the buy- back was approved till the date of notice convening the general meeting.

9. The maximum and minimum price at which purchases and sales referred to above were made along with the relevant dates.

10.  Intention of the promoters and persons in control of the company to tender shares or other specified securities for buy-back indicating the number of shares or other specified securities, details of acquisition with dates and price.

11. A confirmation that there are no defaults subsisting in repayment of deposits, redemption of debentures or preference shares or repayment of term loans to any financial institutions or banks.

12.  A confirmation that the Board of Directors has made a full enquiry into the affairs and prospects of the company and that they have formed the opinion that immediately following the date on which the General Meeting or the meeting of the Board of Directors is convened there will be no grounds on which the company could be found unable to pay its debts, as regards its prospects for the year immediately following that date that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date and in forming their opinion for the above purposes, the directors shall take into account the liabilities as if the company were being wound up under the provisions of the Companies Act, 1956 or Companies Act or the Insolvency and Bankruptcy Code 2016 (including prospective and contingent liabilities).

13. A report addressed to the Board of Directors by the company’s auditors stating that they have inquired into the company’s state of affairs, the amount of the permissible capital payment for the securities in question is in their view properly determined and the Board of Directors have formed the opinion as specified above on reasonable grounds and that the company will not, having regard to its state of affairs, will not be rendered insolvent within a period of one year from that date.

9. Schedule II

Disclosures in the Public Announcement for Buy- Back through Tender Offer and from Odd Lots and from the Open Market through Book Building Process

ParticularsContent
Public Announcement1. The Public announcement ha to be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than 2
directors of the company one of whom shall be a managing director where there is one.

2. A full and complete disclosure of all material facts including the disclosures mentioned in Schedule I have to be made.

10. Schedule III

Disclosures in the Letter of Offer for Buy- Back through Tender Offer and from Odd Lot Holders

ParticularsContent
Letter of OfferThe letter of offer has to be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than 2 directors of the company one of whom has to be a managing director where there is one. The letter of offer has to contain the following-
1. Disclosures as mentioned in Schedule IV
2. Disclaimer Clause as may be specified by the Board
3. Record date and ratio of buy-back as per the entitlement in each category.

11. Schedule IV

Public Announcement for Open Market Buy- Back through Stock Exchange

ParticularsContent
Public Announcement1. The Public announcement has to be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than 2 directors of the company one of whom has to be a managing director where there is one.

2. A full and complete disclosure of all material facts including the disclosures mentioned in Schedule I.

In addition to the disclosures in Schedule I, the following disclosures have to be made-

1. Date of shareholders’ approval for buy-back, if applicable.

2. Minimum and maximum number of securities that the company proposes to buy-back, sources of funds from which the buy-back would be made and the cost of financing the buy-back.

3. Proposed time table from opening of offer till the
extinguishment of the certificates.

4. Process and methodology to be adopted for the buy- back.

5. Brief information about the company.

6. Audited Financial information for the last 3 years and the lead manager shall ensure that the particulars (audited statement and un-audited statement) contained therein shall not be more than more than 6 months old from the date of the public announcement together with financial ratios as may be specified by the Board.

7. Details of escrow account opened and the amount deposited therein.

8. Listing details and stock market data including high, low and average market prices of the securities of the company proposed to be bought back, during the preceding 3 years, monthly high and low prices for the 6 months preceding the date of the public announcement, the number of securities traded on the days when the high and low prices were recorded on the relevant stock exchanges during the period stated above, the stock market data referred to above shall be shown separately for periods marked by a change in capital structure, with such period commencing from the date the concerned stock exchange recognises the change in the capital structure.(e.g. when the securities have become ex-rights or ex-bonus), the market price immediately after the date of the resolution of the Board of directors approving the buy-back and the volume of securities traded in each month during the 6 months preceding the date of the public announcement along with high, low and average prices of securities of the company, details relating to volume of business transacted should also be stated for respective periods.

9. Present capital structure (including the number of fully paid and partly paid securities) and shareholding pattern.

10. The capital structure including details of outstanding convertible instruments, if any post buy-back.

11. Aggregate shareholding of the promoter group and of the directors of the promoters, where the promoter is a company and of persons who are in control of the company.

12. Aggregate number of shares or other specified securities purchased or sold by persons mentioned in the clause above during a period of twelve months preceding the date of the public announcement; the maximum and minimum price at which purchases and sales referred to above were made along with the
relevant dates.

13. Management discussion and analysis on the likely impact of buy-back on the company’s earnings, public holdings, holdings of NRIs/FIIs etc., promoters holdings and any change in management structure.

14. Details of statutory approvals obtained.

15. Collection and bidding centres.

16.  Name of compliance officer and details of investors service centres.

17. Such other disclosures as may be specified by the
Board from time to time.

12. Schedule V

Fees

Every merchant banker while submitting the offer document or a copy of the public announcement to the Board, has to pay fees as set out below-

Offer SizeFees (INR)
Less than or equal to INR 10 croresINR 5 lakhs
More than INR 10 crores but less than or equal to INR 1,000 crores0.5% of the offer size
More than INR 1,000 croresINR 5 crores plus 0.125% of the portion of offer size in excess of INR 1,000 crores.

The fees are payable by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by the Reserve Bank of India or by a demand draft in favour of SEBI at Mumbai.


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Manohar Samal