The Securities and Exchange Board of India (SEBI) has proposed new safeguards and procedural changes to reintroduce open-market share buybacks through stock exchanges. Key among these proposals is the mandatory electronic intimation to shareholders, stricter timelines for completion, and the freezing of promoter holdings during the buyback period.
SEBI has outlined that open market buybacks conducted via stock exchanges must be finalized within 66 working days from the offer’s commencement. Additionally, the regulator has maintained the existing requirement that at least 40 percent of the buyback amount be utilized within the initial half of the offer period.
These proposals stem from recommendations made by the Primary Market Advisory Committee (PMAC) and subsequent internal discussions within SEBI. The regulator had earlier released a consultation paper in April 2026, emphasizing the need for the reintroduction of open market buybacks as a supplementary option under current buyback regulations.
PMAC had suggested extending the buyback duration up to six months and increasing the utilization threshold to 50 percent. However, SEBI argued that such an extended timeframe could diminish the relevance of buybacks in fluctuating market conditions and complicate tracking for shareholders. The authority also noted ongoing modifications under the Finance Act, 2026, concerning the permissible interval between successive buyback offers as a rationale for adopting a balanced approach.
Additionally, SEBI proposed eliminating the necessity for a separate trading window for buyback transactions, permitting them to proceed through regular trading mechanisms. The requirement to disclose the company’s identity as a purchaser on electronic screens would also be removed. The separate trading window was initially created to identify investors eligible for beneficial tax treatment, which is no longer applicable.
As another precaution, SEBI intends to freeze shares and other specified securities held by promoters and their associates at the ISIN level during the buyback period. However, this freezing would not apply for shares tendered in buybacks executed through the tender offer method.
Moreover, SEBI is considering an explicit provision to ensure that companies do not engage in buybacks that would violate minimum public shareholding standards.
Lastly, in a move to reduce compliance costs, SEBI has proposed making the appointment of a merchant banker for buybacks optional. Responsibilities typically managed by merchant bankers, such as the filing of offer documents and regulatory compliance tasks, may instead be reassigned to companies, stock exchanges, and secretarial auditors.
SEBI has invited public comments on these proposals until May 29.
