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Informist, Tuesday, Jul. 7, 2026

MUMBAI – The Securities and Exchange Board of India has allowed listed companies to buy back their shares through the open market route from Aug. 1. The regulator Tuesday notified an amendment to the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018. This marks a reversal from the regulator's decision to phase out the mechanism. SEBI has also sought to add efficiency and transparency to the process of repurchase of shares by listed companies in a bid to make it equitable for all shareholders. 

The regulator has restricted the size of the buyback to 15% of the company's paid-up capital and free reserves, calculated on both its standalone and consolidated financial statements. The buyback offer must be announced within two days of the special resolution passed by the company. The company also needs to convey electronically to shareholders about the offer. The buyback offer should open within four days from the date of the public announcement and close within 66 days from the date of the offer. 

The buyback offers should not lead to a breach in the minimum public shareholding requirements, the rules said. The Securities Contracts (Regulation) Rules, 1957 and SEBI's Listing Obligations and Disclosure Requirements Regulations, 2015, prescribe a minimum public shareholding of at least 25%.

A buyback offer can only be made within such periods as prescribed by the Companies Act, 2013. Under the Companies Act, 2013, a buyback offer cannot be made within one year from the date of closure of a preceeding buyback offer. 

The regulations have also done away with the requirement to appoint a merchant banker for the buyback process. Regulatory, compliance, and other processes related to the buyback shall be carried out by stakeholders such as the company, its compliance officer, statutory auditor, secreterial auditor, and stock exchanges. The changes, which will be effective from August, were approved by the regulator at its meeting on Jun. 19.  End

Reported by Prateem Rohanekar

Edited by Avishek Dutta

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