Escrow Account

Regulation 10(1) of the Securities and Exchange Board of India provides that a company shall, as and by way of security for performance of its obligations on or before the opening of the offer of re- purchase, deposit in an escrow account such sum as is specified in 10(2), that is:

Ø If the consideration payable does not exceed ` 100 crores, 25% of the consideration;

Ø If the consideration payable exceeds ` 100 crores, 25% up to ` 100 crores, and 10% thereafter.

Escrow account means an account in which money is held until a specified duty is performed, i.e., till the consideration for buy-back of shares is paid to the shareholders. This account consists of cash deposited with a scheduled commercial bank, or bank guarantee in favour of the merchant banker, or deposit of acceptable securities with appropriate margin, with the merchant banker, or combination of these.