The Securities and Exchange Board of India (SEBI) is set to come out with new guidelines to curb insider trading soon.
The market watchdog SEBI also plans to come out with new rules for share buyback in order to “protect &reward” the interest of shareholders.
Mr. U.K. Sinha, SEBI Chairman, said, ' The current regulations on insider trading was “old”. A lot of debate is going on on insider trading. Our current insider trading regulation is very old. A number of changes have come about in other areas. So in order to reconcile our insider trading regulations with the rest of the world, we will come out with new guidelines”
The committee set up by SEBI to look into the matter of insider trading; will start its work soon.
“We are hopeful of coming out with the necessary regulations by the end of this year” Mr. Sinha said.
According to Mr. Sinha, some companies were using the buyback norms as a tool to “manipulate” the share price rather than reward the shareholders.
“In buyback regulations we found that there were instances where companies were announcing a buyback at a certain price & they were not even using 25% of what was allotted for buyback,” he added.
The capital market regulator SEBI recently came out with a discussion paper on share buybacks. “We came out with the discussion paper where we sought comments. We are going to tighten the buyback regulations,” he also said.
Highlighting the need for improving promoter’s disclosure on the shares pledged, Mr. Sinha said, “There are some recent instances where we have found that market was not informed about the actual number of shares pledged by promoters. We are working on some norms that will ensure all sorts of encumbrances on share pledged.”
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