SEBI Plans Sweeping Overhaul Of Share Buyback Framework

The Securities and Exchange Board of India (SEBI) has proposed a broad overhaul of the country’s share buyback framework, including the return of open market buybacks through stock exchanges, tighter execution timelines and relaxed compliance requirements for companies. The proposals were released through a consultation paper on Monday, with public comments invited till 29 May, 2026.

The regulator said the changes are aimed at balancing ease of doing business with stronger investor safeguards. The proposals follow recommendations made by SEBI’s Primary Market Advisory Committee (PMAC) after the open market buyback route through stock exchanges was discontinued from 1 April, 2025.

What Changes Has SEBI Proposed For Buybacks?

One of the biggest proposals is the reintroduction of open market buybacks through stock exchanges. SEBI had first floated the idea in April this year after industry participants raised concerns over the removal of the route.

The regulator has proposed capping the duration of such buybacks at 66 working days. PMAC had suggested allowing companies up to six months to complete the process, but SEBI said a longer timeline could make buybacks less effective in volatile market conditions.

The market regulator also wants companies to continue deploying at least 40% of the earmarked buyback amount during the first half of the offer period. PMAC had recommended increasing this threshold to 50%.

Another proposal seeks to simplify the execution process. SEBI has suggested removing the requirement for a separate trading window for buybacks and allowing purchases through the regular trading mechanism. It has also proposed discontinuing the display of the company’s identity as the buyer on trading screens.

Tighter Rules Around Promoters And Public Shareholding

SEBI has proposed stricter safeguards to prevent misuse during buyback periods. Under the new framework, promoter and promoter group holdings would be frozen at the ISIN level during the buyback period to stop them from trading in company shares.

At the same time, promoters would still be allowed to participate in buybacks conducted through the tender offer route.

The regulator has also proposed explicitly barring companies from launching buybacks if the move could lead to a breach of minimum public shareholding norms.

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Merchant Banker Rule May Become Optional

In another significant step, SEBI has proposed making the appointment of merchant bankers optional for buybacks. The regulator said several functions currently handled by merchant bankers are procedural and can instead be managed by companies, stock exchanges, auditors or compliance officers.

SEBI also wants companies to electronically inform shareholders about buyback offers within one working day of the public announcement to improve communication and transparency.

Sources:

The Economic Times

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