SEBI Brings Back Open Market Share Buybacks From 01 August

The Securities and Exchange Board of India (SEBI) has decided to bring back open market share buybacks through stock exchanges from 01 August 2026. The move reverses an earlier decision to phase out this route and gives listed companies another way to buy back their own shares. It also gives investors an additional opportunity to sell their holdings if the company is buying shares from the market.

A share buyback happens when a publicly traded company chooses to repurchase its shares from the existing shareholders. Since the company holding these shares is essentially double-counting, it usually leads to the reduction of the overall share count or the number of shares available for trading. Often, through buybacks, businesses may intend to provide their shareholders with the advantage of their surplus cash or to make their capital usage more efficient.

Why Has SEBI Brought Back Open Market Buybacks?

Earlier, companies could buy back shares directly through the stock exchange over a period of time. However, SEBI realised that the buybacks carried out in the open market and the tender offer route were taxed differently, which raised the issue of unequal treatment of shareholders. Therefore, it decided to phase out this route.

With changes in the tax rules making the treatment of buybacks more uniform, the regulator has now restored the open market route. SEBI believes this will give companies greater flexibility, lower the cost of buybacks, speed up the process, help support share prices during periods of market volatility and provide another capital allocation option alongside the existing tender offer method.

In an open market buyback, a company purchases its shares through regular stock market transactions instead of offering to buy them at a fixed price. Before the programme begins, the company announces the maximum number of shares or the total amount it plans to buy back, along with the duration of the buyback.

The company then buys shares through the stock exchange over that period, just like any other market participant.

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Who Can Participate In An Open Market Buyback?

Any shareholder can participate in open market buyback. However, the difference from a tender offer is that you are not guaranteed that the company will buy your shares. All transactions within this process are done just like regular stock market trading. So, your sell order will be executed only if it is matched by a buyer. It can either be the company performing the buyback or a different market participant.