SEBI Directs Depositories to Freeze Promoter Holdings During Buybacks

The Securities and Exchange Board of India (SEBI) has issued a directive to depositories requiring them to freeze the holdings of promoters during a company's share buyback period.

Under the new regulatory framework, this restriction on promoter holdings will come into effect immediately upon board approval of the buyback. The freeze will remain active until the official closure of the buyback offer.

Exceptions and Participation Rules

While the general holdings of promoters will be frozen during this period, SEBI has specified certain exceptions to the rule. Promoters will still be allowed to participate in the buyback program, provided they do so through the established tender offer route.

Furthermore, the market regulator clarified that the restriction will not interfere with pre-existing financial arrangements. Any existing pledges on promoter shares that were created prior to the start of the buyback period can still be legally invoked while the freeze is in place.

Implementation Deadline

To ensure compliance with the new directive, SEBI has instructed depositories to establish the required operational infrastructure. Depositories must have these systems fully implemented and operational by August 1.