Summary: In a significant move, SEBI has reintroduced open market buybacks through the stock exchange method and has approved other amendments to the buyback regime.
The regulatory regime governing buybacks has been evolving for the past few years. In 2018, SEBI overhauled the buyback regime and introduced a new set of regulations. Thereafter, in 2023, SEBI introduced further amendments to the buyback regime to simplify the process, eliminating certain methods of buyback and reducing overall timelines. A key feature of the 2023 amendments was the gradual phasing out of open market buyback through the stock exchange, culminating in its elimination effective April 2025.
On April 2, 2026, SEBI issued a consultation paper for public comments titled Re-introduction of Open Market Buy-back of Shares or Other Specified Securities through Stock Exchange. In it, SEBI noted that several industry associations had requested the reinstatement of open market buyback through the stock exchange method—which, until its elimination, had been the second most popular route of undertaking a buyback. SEBI, noting industry representations, the updated tax regime (where public shareholders are taxed on capital gains in a buyback, akin to sale of shares in the normal course on stock exchanges) discussed the possibility of reintroducing stock exchange buyback through the open market, to provide companies with an additional method of conducting a buyback.
In line with the efforts to overhaul the buyback regime, on May 8, 2026, SEBI released another consultation paper with recommendations from the Primary Market Advisory Committee and its own internal deliberations to strengthen the buyback framework and facilitate ease of doing business. The key proposals were:
- additional electronic intimation of buyback to shareholders,
- prescription of maximum timelines for open market buybacks undertaken through stock exchanges,
- dispensation with a separate trading window and display of identity of the company as the purchaser on the electronic screen for open market buybacks undertaken through stock exchanges,
- freezing of promoter shareholding at the ISIN level during the buyback period,
- inclusion of an explicit requirement for companies to maintain minimum public shareholding pursuant to a buyback, and
- granting companies the option of appointing a merchant banker for a buyback as opposed to mandatorily appointing merchant bankers.
Finally, on June 19, 2026, SEBI approved several amendments to the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 (“Buyback Regulations”).
The key amendments are:
- Re-introduction of open market buyback through the stock exchanges: The most significant amendment to the Buyback Regulations is the reinstatement of open market buybacks through stock exchanges, effective August 1, 2026. It signals a positive move for the buyback ecosystem. Companies will now (and once again) have the flexibility to choose between buyback methods. Open market buybacks through stock exchanges are required to be completed within 66 working days from the opening of the buyback, with at least 40% of the funds earmarked for the buyback being utilised within the first half of the buyback period. The text of the amended regulations is yet to be notified. It remains to be seen if SEBI is likely to grant any leniency in compliance with this condition for reasons such as price fluctuations due to market volatility.
- ISIN level Freeze: While an embargo preventing promoters and their associates from dealing in shares or other specified securities of the company existed even previously, SEBI has now imposed stricter methods of implementing this restriction by mandating a freeze on promoter/ associate shareholding at the ISIN level during the buyback period.
- MPS: SEBI now explicitly requires companies announcing buybacks to comply with minimum public shareholding norms—aligning Buyback Regulations with other SEBI rules that companies already follow in their buyback programmes.
- Intervals between Buybacks:To align amendments proposed to be made to the Companies Act, 2013, on intervals between buybacks, SEBI has decided that intervals between two buybacks shall be as specified in the Companies Act for unlisted companies.
- Merchant Bankers: SEBI now allows companies the discretion to appoint merchant bankers for buybacks, as opposed to mandating their appointment. Merchant banker appointment for a buyback was mandatory, with the banker assuming oversight and responsibility for various aspects including administration of the buyback, key functions such as managing escrow process, conducting due diligence, and providing certifications to SEBI. In the consultation papers, SEBI has suggested that various functions that were hitherto managed by merchant bankers could be managed by other agencies, such as the secretarial auditor, stock exchanges, statutory auditors and the company itself—for instance, buyback related escrow functions have been shifted to the stock exchanges and due diligence functions to the secretarial auditor.
As noted in the preceding paragraphs, the text of the amendments to the Buyback Regulations are awaited and there are likely to be practical challenges in implementation. That said, buybacks in India are certainly in an exciting phase with a supportive tax regime.
For further information, please contact:
Aditya Prasad, Partner, Cyril Amarchand Mangaldas
aditya.prasad@cyrilshroff.com
