On July 1, 2026, the Securities and Exchange Board of India (SEBI) notified the SEBI (Buy-Back of Securities) (Amendment) Regulations, 2026. Vide these amendments, which officially come into force on August 1, 2026, SEBI has re-introduced open market buyback method.
Under the SEBI Buy-back Regulations, a listed company may undertake buy-back by tender offer or from the open market through book-building or stock exchange. Earlier, open market buyback through stock exchange was gradually phased out.
The limit was reduced from 15% to 10%, then to 5%, and finally the route was discontinued from April 01, 2025. The reason for discontinuation was mainly the concern that, under price-time order matching, only one or few shareholders may get the benefit while other shareholders who wished to participate may not get an opportunity. There were also taxation-related concerns under the earlier buy-back tax framework.
SEBI has not simply restored the old route; it has reintroduced it with tighter disclosure, timeline, escrow and accountability requirements.
Key amendments:
- Open market buy-back through stock exchange is reintroduced:
- The new limit: Starting August 01, 2026, open market buy-backs via the stock exchange must be less than 15% of the paid-up capital and free reserves, calculated on both standalone and consolidated financial statements
- As against the 2018 framework this limit must now be calculated based on both standalone and consolidated financial statements
- Discretionary Engagement of Merchant Bankers:
- Perhaps the most radical shift is that the appointment of a merchant banker for the buy-back process is now discretionary.
- The Impact: Companies can now choose to manage the buy-back internally. However, if no merchant banker is appointed, their traditional duties are redistributed:
| Activity | Responsibility where no merchant banker is appointed |
| Filing of letter of offer / public announcement and ensuring contents are true, fair and adequate | Company |
| Due diligence and compliance certification | Secretarial Auditor |
| Escrow oversight, bank guarantee, invocation and release | Statutory Auditor |
| Certification relating to adequacy of sell orders and VWAP | Stock Exchanges |
| Presence during extinguishment / destruction of securities in open market buy-back | Compliance Officer |
| Final report submission | Company |
| Ensuring availability of funds and firm financial arrangements | Company |
Hence, listed companies going for buy back after August 01, 2026 are now required to engage secretarial auditor and statutory auditor for increased scope of the work.
3. Mandatory ISIN-level freezing for promoters:
To prevent market manipulation, SEBI has introduced a strict “freeze” on promoter holdings.
- Requirement: Shares held by the promoter and promoter group including their associates (as defined in Buy-Back Regulations) must remain frozen at the ISIN level from the date of the board/special resolution until the closing of the offer.
- Exceptions: In tender offers, this freeze is briefly lifted only for the limited purpose of tendering shares into the buy-back
- Transfer/ Encumbrances: Transfer of shares or other specified securities pursuant to invocation of encumbrances created prior to the commencement of buy-back period on such shares or other specified securities, may be allowed subject to the freeze on such shares or other specified securities continuing to apply pursuant to invocation of encumbrances, and also subject to the conditions as may be specified by the SEBI.
- The company are required to provide necessary instructions to the depositories for giving effect to such freezing of shares or other specified securities.
4. Enhanced compliance & timelines:
- 1-Day electronic intimation: Within one working day of the public announcement, companies must electronically notify all shareholders who held shares on the announcement date. [It needs to be ensured that shareholders email ids are updated]
- Compressed timeline: The buy-back offer must open within four working days of the public announcement and close within 66 working days.
- MPS Safeguards: No buy-back can be proposed if it would lead to a breach of Minimum Public Shareholding (MPS) requirements.
Conclusion:
Listed companies planning a buy-back in the second half of 2026 must decide whether to retain a merchant banker or lean on their statutory and secretarial auditors for the newly assigned regulatory certifications. Furthermore, the mandatory ISIN-level freezing means promoters must plan their liquidity and shareholding strategies well in advance of the board resolution date.