- SEBI approves reintroduction of open-market share buybacks via stock exchanges from Aug 1, 2026
- Buybacks must complete within 66 working days with 40% funds used in first half of the period
- Promoters cannot participate or change shareholding during buybacks through stock exchange route
The Securities and Exchange Board of India (SEBI) has approved the reintroduction of open-market share buybacks through stock exchanges, marking a significant policy reversal aimed at providing listed companies with greater flexibility while strengthening investor safeguards.
The decisions were taken at the regulator's board meeting on Friday.
Under the revised framework, companies will once again be allowed to undertake buybacks through the stock exchange mechanism from August 1, 2026.
SEBI had earlier decided to phase out open-market buybacks in favour of the tender offer route. However, following feedback from market participants, the regulator has now restored the mechanism with tighter safeguards aimed at ensuring greater transparency and efficient utilisation of buyback funds.
The revised framework mandates that buybacks through stock exchanges must be completed within 66 working days.
To prevent companies from delaying purchases until the end of the programme, SEBI has stipulated that at least 40% of the proposed buyback amount must be utilised during the first half of the buyback period.
Promoters will not be allowed to participate in buybacks conducted through the stock exchange route. In addition, promoter shareholding will remain frozen throughout the buyback period to prevent any changes in ownership during the exercise.
SEBI has also made the appointment of a merchant banker optional for such buybacks, reducing compliance costs for companies. However, buyback proposals will have to comply with minimum public shareholding requirements.
The regulator said the revised framework seeks to balance operational flexibility for companies with stronger investor protection measures.
Alongside the buyback reforms, SEBI approved a new framework designed to speed up the launch of Alternative Investment Fund (AIF) schemes.
The move is aimed at reducing procedural delays and enabling fund managers to bring new investment schemes to market more quickly, while maintaining regulatory oversight.
The twin decisions form part of SEBI's broader efforts to simplify regulatory processes, improve market efficiency and encourage wider investor participation in India's capital markets.
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