KOLKATA - India’s market regulator is looking at tightening norms for buyback of shares by companies, its top official said here Thursday.
‘In the recent past, many companies have announced they would buy back shares and after that did not act accordingly,’ said Securities and Exchange Board of India (SEBI) chairman C.B. Bhave here.
‘This is an issue that has come to our notice and we are seeing whether we can tighten our regulations to ensure this does not happen. The announcement needs to be followed by actions,’ Bhave told reporters at the inauguration of SEBI’s new eastern region office.
The regulator has been advised to make it mandatory for companies to buy back a stipulated percentage of shares from shareholders if they make buyback announcements, Bhave said.
He said SEBI has received a few reports of peer review carried out on certain Nifty and Sensex companies, adding: ‘We plan to undertake peer review of some other companies selected at random at a later stage.’
SEBI mandated peer reviews as a measure of investor confidence-building two days after Satyam Computer founder Ramalinga Raju Jan 7 confessed to fudging books for several years.
On the possibility of currency options being given the go-ahead, Bhave said a joint committee of SEBI and the central Reserve Bank of India was looking at various issues involved including the different kind of currency derivatives that can be introduced.
‘It’s not even one year since the committee started looking at these issues,’ he said.
The committee is also finalising its reports on the introduction of interest rate futures.
Regarding the proposed small and medium enterprise (SME) exchange, Bhave said: ‘We have put out the consultative papers and formalised conditions under which we want the exchange to operate. We have received some applications. We need to do some amount of work before this exchange can start operating.’
However, he refused to specify any time frame for the exchange to become operational and said the regulator would be cautious as earlier efforts were not successful.
Bhave also said India was in step with the world in respect to money laundering and was tightening norms to check it.
‘Money Laundering Act is being tightened and that is happening all over the world. Illegal money coming out of crime and then going through legitimate channels is an issue that the whole world is facing and is tightening up on. India is in step with this.’
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