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Trending: Call for Papers Volume 5 | Issue 2: International Journal of Advanced Legal Research [ISSN: 2582-7340]

CRITICAL ANALYSIS OF MODERN BUYBACK REGULATION AND ITS IMPACT ON SMALL SHAREHOLDERS – Saumya Kumari & Shahil Laskar

Historical Context and Evolution of Buyback Regulations

Previously, share buybacks were more regulated because of concerns over market manipulation. Before 1982 in the United States, stock repurchases were criticized as a form of market manipulation. Starting in 1982, the U.S. Securities and Exchange Commission (SEC) established Rule 10b-18, offering a safe harbor for companies to conduct buybacks without being charged with market manipulation so long as they adhere to certain conditions[1].

Likewise, in other jurisdictions such as the European Union and India norms concerning buybacks began to become more relaxed over time focusing following a principle that corporations be given enough leeway for capital structuring. Even so, these regulations existed to prevent abuse as well and more importantly protection for minority/small shareholders from unfair practices[2].

[1]Admin,History of Buybacks (3 oct, 7:00 PM), https://treasurydirect.gov/research-center/history-of-marketable-securities/buybacks/

[2]Ibid