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Informist, Friday, Jun. 19, 2026

--SEBI reintroduces open market buyback through stock exchanges

--SEBI: Cos must inform of open mkt buybacks electronically

--SEBI: Open market buyback via exchanges to be finished in 66 days
--SEBI: Open mkt buyback will be treated as normal trading transaction
--SEBI: Appointing merchant banker for open market buyback to be cos' call
--CONTEXT: Comments by SEBI Whole Time Member Kamlesh Varshney at press meet

--SEBI Varshney: 40% open mkt buyback in 33 days to evenly spread it out

 

MUMBAI – The Securities and Exchange Board of India has reintroduced open-market buybacks of securities through stock exchanges, following a revision to the taxation framework to provide greater flexibility in undertaking buybacks, reduce procedural complexity, and strengthen investor protection.

 

Currently, buybacks can be executed through the tender offer route and the open-market route via the book-building process. The regulator is reintroducing buyback through the stock exchange from Aug. 1 as an additional route, SEBI Chairman Tuhin Kanta Pandey said at a press conference on Friday after a board meeting.

 

The earlier taxation pattern for buyback was inequitable, SEBI's whole-time member Kamlesh Chandra Varshney said at the press conference. Eventually, companies stopped using the special buyback window because it was of no use, so SEBI decided to close it, Varshney said.

 

Companies will have to disseminate information about the buyback to shareholders electronically, in addition to the public announcements already made via newspaper advertisements. These byubacks will have to be completed within 66 working days from opening.

 

Additionally, 40% of the funds earmarked for these buybacks must be utilised within the first half of the buyback period. Responding to a query, Varshney said the idea behind these new buyback requirements was to spread the buyback issue evenly rather than concentrate it towards the end of the buyback period.

 

"Due to changes in the taxation framework applicable for buy-back and the fact that promoters are not allowed to take part in open market buy-back, now open market buy-back through stock exchanges will be treated as normal trading transaction," SEBI said in a release. "(The) requirement of a separate trading window and display of the company's identity as purchaser on the trading screen is being dispensed with," it said.

 

These buybacks must comply with minimum public shareholding norms. The interval between buybacks must comply with the Companies Act, 2013, which currently requires a one-year interval.

 

The appointment of merchant bankers for these transactions will be the prerogative of the company undertaking the buyback – a move enabled by the markets regulator to reduce the company's costs. Should the company opt not to appoint a merchant banker, the activities that would otherwise have been undertaken by the merchant banker will have to be completed by the company, the compliance officer, the statutory auditor, the secretarial auditor, and the stock exchanges. 

End

 

Reported by Anand JC

Edited by Saji George Titus

 

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