Guidelines in respect of the disclosures to be made in the Letter of offer in respect of Buy-back of securities in terms of SEBI (Buy-back of Securities) Regulations, 1998

Posted: 11/02/2012 in Buyback, Circulars, Guidelines, Merchant Bankers, SEBI

Guidelines in respect of the disclosures to be made in the Letter of offer in respect of Buy-back of securities in terms of SEBI (Buy-back of Securities) Regulations, 1998 and Format of Standard letter of offer.

CIRCULAR

CIR/CFD/DCR/ 2 /2012 dated February 9, 2012

To

All Merchant Bankers

1. SEBI (Buyback of Securities) Regulations, 1998 (“the Regulations”) were amended vide notification dated February 07, 2012 with an objective of aligning the regulatory provisions with the principle of equitable treatment to all shareholders and enhancing the efficiency in the Buyback process.

2. The amendments to the regulation necessitate certain changes in the format of standard letter of offer issued vide SEBI circular (MIRSD/DPS-2/MB/Cir-02/8859/04) dated May 07, 2004. The revised format of standard letter of offer is given at Annexure-A.

3. This circular shall come into force with immediate effect.

4. This circular is in supersession of the previous circular no. MIRSD/DPS-2/MB/Cir-02/8859/04 dated May 07, 2004 issued to Merchant Bankers registered with SEBI.

5. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 read with regulation 26 of the SEBI (Buy-Back of Securities) Regulations, 1998 as amended.

6. All Merchant Bankers are advised to ensure compliance with this circular.

7. This circular is available on SEBI website at www.sebi.gov.in under the category “Legal Framework”.

Annexure-A

SECURITIES AND EXCHANGE BOARD OF INDIA

STANDARD LETTER OF OFFER FOR BUY BACK OF SECURITIES IN TERMS OF THE SEBI (BUY BACK OF SECURITIES) REGULATIONS, 1998

General Instructions / Guidelines:

1. The purpose of this standard letter of offer for Buy Back of equity in accordance with Chapter III of the SEBI (Buy Back of Securities) Regulations, 1998 (hereinafter referred to as “the Regulations”) is to provide the requisite information about the company so as to enable the shareholders to make an informed decision of either remaining the shareholders of the company or to exit from the company.

2. Care shall be taken by the Merchant Banker to ensure that the Letter of Offer may not be technical in legal or financial jargons and it shall be presented in simple, clear, concise and easily understandable language.

3. This standard Letter of Offer enumerates the minimum disclosure requirements to be contained in the Letter of Offer for the Buy Back of equity. The Merchant Banker/ the company is free to add any other disclosure(s) which in his / its opinion is material for the shareholders.

4. The merchant banker shall ensure that the disclosures made in the letter of offer are not presented in an incomplete, inaccurate or misleading manner and are made in accordance with the Regulations.

5. The standard Letter of Offer prescribes only the nature of the disclosures that should be contained under various heads in the Letter of Offer and is not intended to describe the language to be contained therein.

6. All the financial data shall be in terms of Rupees Lacs unless required otherwise (e.g. EPS). When financial data pertains to an overseas entity, the rupee equivalent shall be disclosed in terms of Rs. Lacs and the basis of conversion shall also be disclosed. (If so desired, such data may also be disclosed in terms of the monetary unit applicable for that overseas entity).

7. Unless otherwise specified

7.1. Information contained in Letter of Offer shall be as on the date of the Public Announcement (PA).

7.2. The “Regulations” shall mean SEBI (Buy Back of Securities) Regulations, 1998 and subsequent amendments thereof.

8. The source from which data / information is obtained should be mentioned in the relevant pages of Letter of Offer.

9. Merchant Banker shall ensure the following;

9.1 The letter of offer along with the tender form shall be dispatched to the security holders who are eligible to participate in the buyback offer, not later than five working days from the receipt of communication of comments from the Board.

9.2 The date of the opening of the offer shall be not later than five working days from the date of dispatch of letter of offer.

9.3 The offer for buy back shall remain open for a period of ten working days.

10. Merchant Banker shall submit the Due Diligence Certificate in terms of Regulation 20(f) of the Regulations to Board along with the draft Letter of Offer as per the standardized format.

11. The merchant banker to give registration number of the Chartered Accountant who has given the report in terms of clause (xi) of Schedule II, part A of the Regulations.

Click here to download- Format of Standard letter of offer (From Page 5 to Page 32).

Click here to download the Circular- Guidelines in respect of the disclosures to be made in the Letter of offer in respect of Buy-back of securities in terms of SEBI (Buy-back of Securities) Regulations, 1998 and Format of Standard letter of offer- Feb 09, 2012. [PDF Format], {No. of Pages- 32}, (Size- 219Kb).

Source: Securities and Exchange Board of India.

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