Explained! Sebi proposes sweeping changes to buyback framework. 7 things to know

The Securities and Exchange Board of India has proposed sweeping changes to the buyback framework for listed companies, including reintroducing open market buybacks through stock exchanges, relaxing the mandatory merchant banker requirement and tightening safeguards around promoter participation and minimum public shareholding.

The proposals were released through a consultation paper aimed at reviewing and rationalising the SEBI (Buy-Back of Securities) Regulations, 2018. The regulator said the changes follow recommendations made by the Primary Market Advisory Committee (PMAC), along with Sebi’s own internal deliberations to improve ease of doing business while strengthening investor protection.

Sebi had earlier floated a proposal in April 2026 to reintroduce open market buybacks through stock exchanges after the route was discontinued from April 1, 2025. PMAC supported the move but also suggested additional safeguards and operational changes.

Public comments on the consultation paper have been invited till May 29, 2026.

7 key proposals from Sebi

1) Notification to shareholders: One of the key proposals is to require companies to electronically notify shareholders about buyback offers within one working day of the public announcement, ensuring wider and quicker dissemination of information.

2) Buyback timeline

On timelines, PMAC had recommended allowing open market buybacks to remain open for up to six months and increasing the mandatory utilisation threshold to 50% in the first half of the buyback period.

However, Sebi has proposed a shorter maximum duration of 66 working days, arguing that six months would make buybacks cumbersome and less relevant amid changing market conditions. The regulator also wants to retain the existing requirement of deploying at least 40% of the earmarked amount during the first half of the offer period.

3) Separate trading window

Sebi has also proposed removing the requirement for a separate trading window for open market buybacks and discontinuing the display of the company’s identity as purchaser on trading screens. PMAC argued that the earlier rationale linked to tax treatment no longer exists after changes introduced under the Finance Act, 2026.

4) Restrictions on promoter/promoter group

In another significant move, the regulator has proposed freezing promoter holdings at the ISIN level during the buyback period to prevent trading by promoters and their associates. However, promoters would still be allowed to tender shares in buybacks conducted through the tender offer route.

5) Minimum Public Shareholding Compliance

To strengthen compliance with minimum public shareholding (MPS) norms, Sebi plans to explicitly bar companies from launching buybacks that may breach MPS requirements.

6) Spacing between two buybacks

The regulator has also proposed aligning the mandatory gap between two buyback offers with provisions under the Companies Act, 2013, instead of retaining a separate one-year cooling-off requirement under buyback regulations.

7) Merchant banker appointment

To further promote ease-of-doing-business, Sebi has proposed making the appointment of merchant bankers optional for buybacks. The regulator noted that several merchant banker functions are procedural and can instead be handled by companies, stock exchanges, secretarial auditors or compliance officers, reducing compliance costs especially for smaller buybacks.

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