Markets regulator Securities Exchange Board of India, exempted Wipro from complying with regulations with regard to its proposed buyback of Shares.
What does Regulation Say ?
Rregulation 24 (ii) of buy back norms prescribed by the Securities Exchange Board of India, states that a firm cannot go ahead with a buy-back offer if any scheme of amalgamation is pending.
What was the potential violation ?
Wipro was keen to announce the buyback of shares on the same lines it did last year. Wipro wanted to merge its four subsidiaries with itself, the buyback during the same period would have lead to violation of Clause 24(ii). Hence, Wipro explicitly asked for the permissions from the Stock Market Regulators and was granted the same subject to certain conditions.
Since it was contended that this merger was merely an internal re-organisation with its group of companies and there will not be any material impact from the perspective of consolidated financial statements of the company.While the scheme of amalgamation is pending approval of the National Company Law Tribunal (NCLT), Wipro sought a waiver considering the “backlog of cases” at the tribunal.