SEBI mandates promoters' share freeze from buyback approval August 1
SEBI is rolling out a new rule: when a company approves a buyback, the promoters' shares get frozen from that approval date, meaning they generally cannot transfer them - except for tendering shares in the buyback through the tender offer route or invoking pre-existing encumbrances - until the offer closes.
This kicks in from August 1 and is all about making buybacks more transparent and fair for everyone.
Depositories to lock promoters' buyback shares
Depositories have to set up systems to lock these shares at the ISIN level, so there is no sneaky movement behind the scenes.
Even if promoter shares are pledged, they stay frozen during the buyback. But don't worry, promoters can still join in by tendering their shares through the tender offer route.
The new rules apply to listed companies that conduct buybacks and are meant to keep things clear and above board for investors.