Securities and Exchange Board of India (SEBI) has proposed a fresh set of safeguards and procedural changes for reintroducing open-market share buybacks through stock exchanges, including mandatory electronic intimation to shareholders, tighter timelines for completion and freezing promoter holdings during the buyback period.
The regulator has proposed that open market buybacks undertaken through stock exchanges should be completed within 66 working days from the date of opening of the offer. It has also proposed retaining the existing requirement that at least 40 per cent of the buyback size be utilised within the first half of the offer period.
The proposals follow recommendations made by the Primary Market Advisory Committee (PMAC) and further internal deliberations by the regulator. SEBI had earlier floated a consultation paper in April 2026 proposing the reintroduction of open market buybacks through stock exchanges as an additional route under the buyback regulations.
While PMAC had suggested allowing buybacks to remain open for up to six months and increasing the utilisation threshold to 50 per cent, SEBI said such a long duration could make buybacks less relevant amid changing market conditions and cumbersome for shareholders to track. Further, the ongoing changes under the Finance Act, 2026 relating to the permissible gap between two buyback offers as a reason for adopting a “balanced approach.”
SEBI has further proposed dispensing with the requirement for a separate trading window for buyback transactions and allowing them through the normal trading mechanism. It has also suggested removing the requirement to display the company’s identity as a purchaser on the electronic screen. The regulator said that the separate trading window was introduced earlier to identify investors eligible for beneficial tax treatment, which is no longer applicable.
As an additional safeguard, SEBI has proposed freezing shares and other specified securities held by promoters and their associates at the ISIN level during the buyback period. However, such freezing would not apply for tendering shares in buybacks conducted through the tender offer route.
The regulator has also proposed inserting an explicit provision to ensure that companies do not undertake buybacks that would breach minimum public shareholding norms.
In another key proposal aimed at easing compliance costs, SEBI has suggested making the appointment of a merchant banker optional for buybacks. Responsibilities currently handled by merchant bankers, including filing of offer documents and regulatory compliance-related activities, may instead be reassigned to companies, stock exchanges and secretarial auditors.
Additionally, SEBI has proposed mandating companies to electronically intimate shareholders regarding buyback offers within one working day of the public announcement. The regulator has invited public comments on the proposals till May 29.