A Comprehensive Legal Analysis of SEBI’s Order under Regulation 28 of the Buy-Back of Securities Regulations, 2018
Order No.: WTM/KCV/CFD/10/2025-26
Date of Order: October 16, 2025
Authority: Kamlesh C. Varshney, Whole Time Member, SEBI
I. Introduction
In a significant interpretative order, the Securities and Exchange Board of India (SEBI) has granted an exemption to Nureca Limited, a listed healthcare and wellness company, allowing it to proceed with a share buy-back despite a pending Scheme of Arrangement involving its wholly-owned subsidiary.
This exemption, granted under Regulation 28 of the SEBI (Buy-Back of Securities) Regulations, 2018 (“Buy-Back Regulations”), relaxes the strict prohibition contained in Regulation 24(ii), which ordinarily bars companies from making a buy-back announcement during the pendency of any merger or amalgamation under the Companies Act, 2013.
The order, passed on October 16, 2025 by Whole Time Member Mr. Kamlesh C. Varshney, underscores SEBI’s pragmatic approach toward procedural compliance in corporate restructurings that are purely internal and non-prejudicial to public shareholders.
II. Corporate Background
Nureca Limited (“Nureca” or “Transferee Company”), incorporated on November 2, 2016, is a BSE and NSE-listed company engaged in digital healthcare products and wellness solutions.
The company’s registered office is located in Goregaon East, Mumbai, and it operates under the regulatory framework of the Companies Act, 2013 and SEBI’s listing and disclosure regime.
Nureca filed an application dated September 4, 2025, seeking SEBI’s exemption from the enforcement of Regulation 24(ii) of the Buy-Back Regulations, 2018, in connection with a Scheme of Arrangement involving its wholly-owned subsidiary, Nureca Technologies Private Limited (“NTPL”).
III. Scheme of Arrangement – Key Details
The Scheme, approved by Nureca’s Board on May 20, 2025, and subsequently by shareholders through a special resolution on June 16, 2025, provides for the merger by absorption of NTPL (Transferor Company) with Nureca Limited (Transferee Company).
Key Characteristics of the Scheme:
- Nature: Internal restructuring; merger of a wholly-owned subsidiary with its holding company.
- Consideration: No consideration payable, since the parent company already holds 100% of the transferor company’s shares.
- Effect: No change in shareholding pattern, no issuance of new shares, and no dilution of public shareholding.
- Status: Application for NCLT approval filed on July 30, 2025 and pending adjudication.
Thus, the transaction is a plain-vanilla merger within the same corporate group, having no economic or ownership change.
IV. The Regulatory Conflict – Buy-Back During a Pending Merger
1. The Restriction under Regulation 24(ii)
Regulation 24 of the Buy-Back Regulations, 2018 prescribes conditions and obligations applicable to companies undertaking a buy-back.
Sub-regulation (ii) specifically provides:
“No public announcement of buy-back shall be made during the pendency of any scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act.”
This clause acts as a preventive measure, ensuring that the company’s capital structure is not altered during a pending restructuring — thereby maintaining investor protection and market integrity.
2. The Power to Relax under Regulation 28
However, Regulation 28 of the same Regulations empowers SEBI to relax strict enforcement of procedural requirements:
“The Board may, in the interest of investors and the securities market, relax the strict enforcement of any requirement of these regulations… if the Board is satisfied that:
(a) the requirement is procedural in nature; or
(b) the requirement may cause undue hardship to investors.”
Thus, SEBI holds discretionary authority to classify certain requirements as procedural rather than substantive, permitting relaxation in deserving cases.
V. Nureca’s Submissions before SEBI
In its detailed application, Nureca Limited put forth the following justifications and arguments:
- Purely Internal Restructuring:
The Scheme involves a merger of a wholly-owned subsidiary, resulting in no change in the shareholding structure or public ownership. - No Impact on Public Shareholders:
As no new shares are issued and no ownership dilution occurs, public shareholders remain unaffected. - Buy-Back for Investor Benefit:
The company contended that the buy-back is intended to return surplus cash to shareholders, enhancing investor value, particularly benefiting small shareholders. - Promoter Undertaking:
Promoters have undertaken not to participate in the buy-back, ensuring that the entire benefit accrues to the public shareholders. - Regulatory Parity with LODR Exemptions:
Citing SEBI Master Circular No. SEBI/HO/CFD/POD-2/P/CIR/2023/93 (June 20, 2023) and Regulation 37(6) of the LODR Regulations, the company emphasized that SEBI already exempts mergers between wholly-owned subsidiaries and holding companies from several listing-related compliances. - No Statutory Bar under Companies Act, 2013:
The Companies Act does not prohibit a buy-back during the pendency of a merger; hence, compliance with both schemes can proceed concurrently. - Avoiding Undue Hardship:
Any delay in granting the exemption would deprive shareholders of timely liquidity and cause undue hardship by postponing the buy-back program.
VI. SEBI’s Considerations and Legal Reasoning
Upon reviewing the application, SEBI examined the legal interplay between Regulation 24(ii) and Regulation 28 of the Buy-Back Regulations.
1. Nature of Regulation 24(ii)
SEBI observed that Regulation 24(ii) is ordinarily a substantive restriction, aimed at avoiding overlapping corporate actions that could confuse investors or alter financial parameters mid-transaction.
However, SEBI noted that in exceptional circumstances, such as mergers of wholly-owned subsidiaries, the regulation could be procedural in nature, given that:
- No fresh issuance of shares occurs;
- The transaction has no effect on the public float; and
- The buy-back does not conflict with the purpose or mechanics of the merger.
2. Application of Regulation 28
Relying on Regulation 28, SEBI emphasized its discretion to relax strict procedural enforcement if it is satisfied that doing so serves investor interest and market efficiency.
In this case, SEBI found that:
- The Scheme of Arrangement was an internal corporate restructuring;
- The buy-back was an independent, shareholder-beneficial measure; and
- There was no potential prejudice or confusion to investors or markets.
3. Determination of Procedural Character
SEBI concluded that the prohibition under Regulation 24(ii) — in the specific factual matrix of Nureca’s merger — is procedural rather than substantive.
Accordingly, strict enforcement was deemed unnecessary, as it would result in avoidable hardship and delay to investors without advancing any regulatory objective.
VII. SEBI’s Decision and Conditional Exemption
Operative Part of the Order
In exercise of powers under Section 11(1) of the SEBI Act, 1992 and Regulation 28 of the Buy-Back Regulations, 2018, SEBI granted exemption to Nureca Limited from compliance with Regulation 24(ii) in relation to its proposed buy-back, subject to specific conditions.
Conditions Imposed by SEBI:
- Compliance with Applicable Laws:
The proposed buy-back, if approved, must comply fully with:- The Companies Act, 2013;
- The SEBI (Buy-Back of Securities) Regulations, 2018; and
- All other applicable laws.
- Accuracy of Submissions:
All statements, figures, and averments made in the application and the Scheme of Arrangement submitted to BSE and NSE must be true and correct. - Limited Scope of Exemption:
The exemption is limited to Regulation 24(ii) and does not extend to any other provision of the Buy-Back Regulations or the Companies Act. - Non-Precedent Clause:
SEBI clarified that this exemption is case-specific and shall not operate as a precedent for future relaxations.
Effect of the Order:
The company may now proceed to place its buy-back proposal before the Board of Directors without waiting for NCLT approval of the Scheme of Amalgamation.
VIII. Legal and Regulatory Implications
1. Judicial and Regulatory Harmony
SEBI’s reasoning aligns with the judicial principle of purposive interpretation, ensuring that procedural safeguards do not obstruct legitimate corporate actions where no investor risk exists.
2. Flexibility in Internal Mergers
This order provides welcome regulatory flexibility to listed companies engaging in intra-group mergers. It clarifies that mergers of wholly-owned subsidiaries may not automatically bar parallel corporate actions like buy-backs.
3. Investor-Centric Approach
By emphasizing the interest of investors, SEBI reaffirmed that the purpose of buy-back regulations is not to restrict capital management unnecessarily but to ensure transparency and fairness.
4. Precedent Value
Although SEBI explicitly stated that the exemption shall not act as a precedent, it effectively lays down guiding principles for future relaxations where:
- The restructuring is intra-group and non-commercial;
- Public shareholding remains unaffected; and
- Buy-back benefits accrue solely to non-promoter shareholders.
IX. Conclusion
The SEBI Exemption Order in the matter of Nureca Limited (October 16, 2025) demonstrates a measured and principle-based approach to regulatory relaxation.
By distinguishing procedural requirements from substantive prohibitions, SEBI has ensured that compliance does not become an obstacle to legitimate shareholder value initiatives.
In essence, the order represents a fine balance between investor protection, regulatory consistency, and business practicality — a hallmark of modern securities regulation.
Key Takeaways
| Aspect | SEBI’s Position |
|---|---|
| Nature of Regulation 24(ii) | Procedural in case of internal restructuring |
| Basis of Exemption | Regulation 28 of Buy-Back Regulations, 2018 |
| Investor Impact | No prejudice or dilution to public shareholders |
| Promoter Participation | Excluded from buy-back |
| Validity | Case-specific; non-precedent |
| Broader Implication | Encourages smoother corporate reorganizations with investor benefit focus |
Citation
Order Title: Exemption Order in the matter of Nureca Limited
Order No.: WTM/KCV/CFD/10/2025-26
Date: October 16, 2025
Authority: Kamlesh C. Varshney, Whole Time Member, SEBI