Sebi proposes easier buyback rules, relaxed MF borrowing

The proposed changes to the buyback framework address concerns that led to the phasing out of the stock exchange route in 2015, including equitable shareholder participation and tax distortions. Under the new proposal, public shareholders would be taxed on their actual capital gains, aligning with normal market sale taxation. The regulator also plans to introduce safeguards such as mandatory electronic intimation to shareholders and restrictions on promoter transactions during buyback periods. Several functions currently performed by merchant bankers may be reassigned to companies, stock exchanges, and compliance officers, further simplifying the process, especially for smaller buybacks.

In parallel, Sebi is looking to broaden the use of intraday borrowing facilities for mutual funds. Previously, these facilities were primarily for bridging timing gaps between redemption payouts and guaranteed receivables. The proposed relaxation would allow asset management companies to use these lines for trade settlements, foreign exchange transactions, derivative obligations, and repayment of existing borrowings, treating them more as a general cash management tool.