Market regulator clears the deck for proposed share buyback in NTPC

The Securities and Exchange Board of India (Sebi) has cleared the deck for a proposed share buyback in NTPC. The state-owned power generation company had approved the market regulator seeking an exemption from strict enforcement of buyback regulations –specifically 24(ii) of Sebi Buyback Regulations 2018.

Under this regulation, a company is barred from announcing a buyback during the pendency of any scheme of amalgamation.

Last year, the NTPC board had approved a scheme of amalgamation entailing the merger of Nabinagar Power Generating Company and Kanti Bijlee Utpadan Nigam with itself. Both the firms are wholly-owned subsidiaries of NTPC. The scheme of amalgamation is yet to be completed. As a result, NTPC is technically prohibited from announcing a buyback.

However, the company is among the 8 public sector undertakings (PSUs) directed by the government to consider a share buyback in order to boost its disinvestment kitty.

In an order issued on Friday, Sebi said it had granted an exemption to NTPC from compliance with Regulation 24(ii) of the Buy–back Regulations 2018 subject to certain caveats.

Sebi said the scheme of amalgamation would have to be approved by the shareholders of NTPC. Further, it has to be filed with the Ministry of Corporate Affairs (MCA) and the stock exchanges and other provisions of buyback regulations have to be met.

Apart from NTPC, Coal India, NMDC, MOIL, KIOCL and Engineers India are the other PSUs identified by the government for buybacks. None of these companies have announced their buyback plans formally.