Marker regulator SEBI has put some restrictions on companies on buyback of their shares on the exchange platform. As per the rules, companies cannot purchase (buy back) in a single day more than 25 per cent shares of the preceding last 10 days average daily volume (in value) of the stock.
Also, SEBI has specified that companies cannot place bids in the pre-open market, during the first 30 minutes and the last 30 minutes of each day’s trading session. The purchase order should be within the range of plus or minus 1 per cent from the last traded price. In this regard, the company as well as its appointed broker should ensure the compliance with the provisions.
Stock exchanges are authorised to impose fines in case of non compliance, SEBI has said. SEBI has asked companies to deposit the margins required for such buybacks in an escrow account.