Escrow requirement for open-market buy-backs ensures secured payment and merchant banker control over disbursement. Companies doing open-market buy-backs must create an escrow account within the prescribed period and deposit a specified portion of the buy-back consideration as security. The escrow may include cash, bank guarantees in favour of the merchant banker, freely transferable securities, government securities, or certain mutual fund units, with margins. Cash portions must allow the merchant banker to instruct payments; bank guarantees must remain valid beyond the buy-back period and not be returned until obligations are met. Non-compliance can lead to partial forfeiture of escrow, subject to specified exceptions, with forfeited amounts to be deposited in SEBI's Investor Protection and Education Fund.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Escrow requirement for open-market buy-backs ensures secured payment and merchant banker control over disbursement.
Companies doing open-market buy-backs must create an escrow account within the prescribed period and deposit a specified portion of the buy-back consideration as security. The escrow may include cash, bank guarantees in favour of the merchant banker, freely transferable securities, government securities, or certain mutual fund units, with margins. Cash portions must allow the merchant banker to instruct payments; bank guarantees must remain valid beyond the buy-back period and not be returned until obligations are met. Non-compliance can lead to partial forfeiture of escrow, subject to specified exceptions, with forfeited amounts to be deposited in SEBI's Investor Protection and Education Fund.
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