Sebi reinstates open market buybacks via exchanges

These include the reintroduction of open market buybacks through exchanges, the relaxation of borrowing norms for mutual funds and faster fundraising routes for alternative investment funds (AIFs).

The capital market regulator also approved proposals to simplify the transmission of securities and adopted a new code of conduct for its board members.

Currently, buybacks have to be made through the tender-offer route and the open-market route through bookbuilding.

Amendment to MF Regulations

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“Considering the revised taxation framework applicable for buybacks, open market buyback through stock exchange is being reintroduced with effect from August 1 to provide additional route for the company to undertake buyback,” Sebi said.

Under the revised framework, buybacks executed through stock exchanges must be completed within 66 working days, with at least 40% of the earmarked funds deployed during the first half of the buyback period. Companies will also be required to communicate buyback details directly to shareholders electronically via email and phone messages in addition to newspaper advertisements. Promoter holdings will remain frozen at the security level during the buyback period, while the appointment of a merchant banker has been made optional to lower compliance costs. “Sebi’s decision to allow two buybacks in a year aligns the regulations with the Companies Act and provides listed companies greater flexibility in capital management-critical when India Inc. has already announced buybacks worth ₹25,000 crore in 2026 so far, the highest since 2023,” said Makarand M Joshi, founder partner MMJC and Associates, a corporate compliance firm. “The move to reintroduce open market buybacks and discretion in appointment of merchant bankers for buybacks shifts responsibility to the company, stock exchanges, and statutory auditors. This would raise the bar on board-level and auditor accountability.”

The regulator’s board also approved an amendment to mutual fund regulations to permit intraday borrowings for managing liquidity mismatches arising from settlement timing differences, foreign exchange settlements and mark-to-market obligations on derivative positions.