Miscellaneous

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Chapter VI. Miscellaneous

Regulation 26. Powers of the Board to issue directions.

26(i).

  • The Securities and Exchange Board of India (Board) has strong powers to protect investors and the securities market.

  • These powers are in addition to other enforcement actions, such as:

    1. Penalties, or

    2. Prosecution under Section 24 of the Companies Act / SEBI Act.

  • Even without starting prosecution, the Board can issue directions as it thinks fit.

  • (a). Prohibition on cancellation of securities

    1. The Board may stop the company from cancelling (extinguishing) shares that were bought back in violation of the law.

    2. So , If shares were wrongly bought back then the company cannot complete the process by cancelling them.

  • (b). Direction to sell or divest securities

    1. The Board may direct the concerned person to sell or dispose of shares or securities acquired illegally.

    2. This applies when shares were acquired:

      1. In violation of these regulations, or

      2. In violation of any other applicable law.

  • (c). Restriction on further buy-back

    1. The Board may restrain the company from making any further buy-back offer.

    2. This prevents the company from continuing or repeating non-compliant behavior.

26(ii).

  • A copy of such direction issued by the Board (in accordance with 26(i)(b) shall also be forwarded to Registrar of Companies.

Regulation 27. Power of the Board to remove difficulties.

  • Sometimes, the provisions of the regulations may not be very clear in their meaning or application.

  • In such situations, the regulator, i.e., Securities and Exchange Board of India, has the authority to step in.

  • The Board may issue clarifications or guidelines to:

    1. Explain how a provision should be interpreted, or

    2. Guide how it should be applied in practice.

  • These clarifications can be issued from time to time, whenever required.

Regulation 28. Power to relax strict enforcement of the regulations.

28(i)

  • The Securities and Exchange Board of India (Board) has the power to relax strict enforcement of certain regulatory requirements.

    1. This power is exercised only when it is in the interest of investors and the securities market.

    2. However, this relaxation cannot be applied to provisions that are derived from the Companies Act.

  • The Board must be satisfied with specific conditions before granting relaxation.

  • (a). Procedural requirement

    1. If the requirement is procedural in nature, the Board may relax it.

    2. This means:

      1. The rule relates to process, formality, or technical compliance.

      2. It should not something that affects the substance or core objective of the regulation.

      3. Example: minor delay in filing, format-related issues, etc.

  • (b). Undue hardship to investors

    1. If strict compliance with a requirement would cause undue hardship to investors, the Board may relax it.

      1. So , Following the rule strictly would lead to unfair or burdensome consequences for investors.

      2. The Board may intervene to ensure fairness and investor protection.

28(ii).

  • If a company wants to obtain relaxation under 28(i), it must formally apply to the regulator.

    1. The application must be filed with the Securities and Exchange Board of India (Board).

    2. The application must be self-attested by the company.

    3. The company must clearly provide complete details of the request.

    4. It must also specify the grounds (reasons) for seeking relaxation.

  • These grounds should explain:

    1. Why strict compliance is not feasible, or

    2. How it causes procedural difficulty or hardship.

  • The company cannot make a vague request; it must give a proper justification supported by facts.

28(iii).

  • When the company applies for relaxation under 28(ii) , it must pay a fee along with the application.

    1. The fee amount is ₹50,000.

    2. This fee is non-refundable, meaning it will not be returned even if the request is rejected.

    3. The payment must be made to the Securities and Exchange Board of India (Board).

  • The fee can be paid through the following modes:

    1. NEFT / RTGS / IMPS (direct bank transfer),

    2. Online payment through SEBI Payment Gateway, or

    3. Any other mode specified by the Board from time to time.

  • The company must ensure that the payment is completed and properly recorded while filing the application.

28(iv).

  • After the company files an application, the Securities and Exchange Board of India (Board) begins its evaluation.

    1. The Board must first give the applicant a reasonable opportunity of being heard

    2. The company can present its case, explanations, and justifications.

    3. The Board will then examine all relevant facts and circumstances.

    4. This includes the nature of the request, supporting documents, and impact on investors and the market.

  • After proper consideration, the Board will pass a reasoned order.

  • A “reasoned order” means the decision will include clear reasons and justification.

  • The Board may either:

    1. Grant the relaxation, or

    2. Reject the request.

  • The decision must be made as expeditiously as possible.

Regulation 29. Repeal & Savings

29(i).

  • The Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998 are repealed.

    1. This repeal takes effect from the date the new regulations come into force.

    2. From that date onwards, all buy-back activities must be governed only by the new regulations.

29(ii).

(a).

  • Even though the old regulations are repealed, past actions do not become invalid.

  • Any action taken under the old regulations (before repeal) is preserved and recognised.

  • This includes actions such as:

    1. Comments on letter of offer,

    2. Exemptions granted by the Board,

    3. Fees collected,

    4. Adjudication proceedings,

    5. Enquiries or investigations initiated,

    6. Show-cause notices issued.

  • All such actions are treated as if they were taken under the corresponding provisions of the new regulations.

(b).

  • Even after repeal of the old regulations, their past operation continues to have effect.

  • Anything that was validly done or suffered under the old regulations remains valid.

  • All rights, privileges, obligations, and liabilities that:

    1. Were acquired,

    2. Accrued, or

    3. Incurred under the old regulations,

  • will continue to exist.

  • Any penalty, forfeiture, or punishment arising from violations of the old regulations will still be enforceable.

  • Any investigation, legal proceeding, or remedy related to:

    1. Rights,

    2. Obligations,

    3. Liabilities, or

    4. Violations,

  • will continue unaffected.

  • These matters will proceed as if the old regulations had never been repealed.

(c).

  • If a company had already made a public announcement of buy-back under the repealed regulations, then:

    1. That buy-back cannot be shifted to the new regulations.

  • The company must continue and complete the entire buy-back process under the old regulations.

  • The new regulations will not apply to such ongoing offers.

29(v).

  • After repeal of the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998, the old framework no longer applies.

  • However, other laws, regulations, guidelines, or circulars may still contain references to the old 1998 regulations.

  • So , any reference to the 1998 Regulations in:

    1. Other regulations,

    2. Guidelines, or

    3. Circulars issued by the Board,

    will be automatically interpreted as a reference to the corresponding provisions of the new regulations.

  • There is no need to formally amend each document individually.

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