Sebi to formulate new norms on share buy-back soon

To come out with insider trading guidelines this year

Securities and Exchange Board of India (SEBI) will formulate the new guidelines on share buy-back very soon to protect the interest of shareholders, UK Sinha, chairman of Securities and Exchange Board of India (SEBI).

"In buy-back regulations we found that there were instances where companies were announcing a buy-back at a certain price and they were not even using 25% of what was allotted for buy-back. We got the impression that some companies are trying to use the buy-back regulations not to reward shareholders but to manipulate the share price. So, keeping that in mind we are now coming out with a new buy-back regulation. We are going to further tighten the norms," Sinha told reporters on the sidelines of a seminar organised by the Confederation of India Industry (CII) here today.

The stock market regulator has already come out with a discussion paper on share buy-back and has received "large number of comments" from various stakeholders, he said.

SEBI also plans to revise its insider trading regulations by the end of this year. "Our insider trading regulations are very old. So, we have set up a committee. The committee will start its work very soon and hopefully during this year, we will come out with revised insider trading regulations," Sinha said.

He admitted that there was need to improve the disclosure requirements by the promoters on the shares pledged by them.

"I'm getting inputs that people have come out with creative solutions and they have created some instruments through which they are pledging and not informing the stock exchange. We did a study and found that in many cases the market was not informed (about the share pledging). I would like to assure that very soon we are going to take measures to ensure that all these incidents are reported," Sinha said.

On corporate governance, he said, SEBI will try to implement its proposed guidelines as soon as the Companies Bill is enacted. The draft guidelines on corporate governance broadly deals with three areas - the method of fixing the compensation of top personnel of a company, the governance at the board level and role of independent directors, and issues with related party transactions.

"The Companies Bill has been passed in one house of the parliament and hopefully it will be passed in the other house very soon and become a law. As soon as the Bill is enacted, we will try to implement our guidelines on corporate governance," he said.