Discuss the provisions for Escrow Account for open market Buy Back through Stock Exchange.

The following are the provisions for Escrow Account for open market buy back through stock exchange: a) The company shall, within two working days of the public announcement, as and by way of security for performance of its obligations under the regulations, deposit in an escrow account such sum as specified as below b) The escrow amount shall be payable in the following manner: if the consideration payable does not exceed ₹100 crores; 25 per cent of the consideration payable; if the consideration payable exceeds ₹100 crores; 25 per cent upto ₹100 crores and 10 percent thereafter. c) The escrow account referred to in this regulation shall, subject to appropriate margin as specified by the Board, consist of, cash including bank deposits deposited with any scheduled commercial bank, or bank guarantee issued in favour of the merchant banker by any scheduled commercial bank, or deposit of frequently traded and freely transferable equity shares or other freely transferable securities, or (iiia) government securities, or (iiib) units of mutual funds invested in gilt funds and overnight schemes, or a combination of above Explanation: The cash component of the escrow account may be maintained in an interest-bearing account, provided that the merchant banker ensures that the funds are available at the time of making payment to shareholders. d) Where the escrow account consists of deposit with a scheduled commercial bank, the company shall, while opening the account, empower the merchant banker to instruct the bank to make payment the amount lying to the credit of the escrow account, as provided in the regulations. e) Where the escrow account consists of a bank guarantee, such bank guarantee shall be in favour of the merchant banker and shall be valid until thirty working days after the expiry of buy-back period or until the completion of all obligations under these regulations, whichever is later. Explanation: The bank guarantee shall not be returned by the merchant banker until the completion of all obligations under these regulations. f) The company shall, in case the escrow account consists of securities, empower the merchant banker to realise the value of such escrow account by sale or otherwise and if there is any deficit on realisation of the value of the securities, the merchant banker shall be liable to make good any such deficit. g) In case the escrow account consists of approved securities, these shall not be returned by the merchant banker till completion of all obligations under the regulations. h) Where part of the escrow account is in a form other than cash, the company shall deposit with a scheduled commercial bank, in cash, a sum of not less than two and half per cent of the total amount earmarked for buyback as specified in the resolution of the Board of Directors or the special resolution, as the case may be, as security for the fulfilment of its obligations under the regulations. i) On payment of consideration to all the securities holders who have accepted the offer and after completion of all formalities of buy-back, the amount, guarantee and securities in the escrow, if any, shall be released to the company. j) The Board in the interest of the securities holders may in case of nonfulfillment of obligations under the regulations by the company forfeit the escrow account either in full or in part The amount forfeited under clause (j) may be distributed pro rata amongst the securities holders who accepted the offer and balance, if any, shall be utilised for investor protection.