Markets regulator Securities and Exchange Board of India
has modified norms for buy-back of shares through the tender offer route, making it mandatory to reserve 15 per cent of the offer for retail investors with holdings up to Rs 2 lakh in the company.
"Fifteen per cent of the number of securities which the company proposes to buy back
or the number of securities entitled as per their shareholding, whichever is higher, shall be reserved for small shareholders," says Securities and Exchange Board of India (Buyback of Securities) (Amendment) Regulations, 2012.
Most of the buybacks are done through open market purchases where the price discovery happens via a book-building process. In the tender offer route, companies accept shares on a proportionate basis.