The market regulator Securities and Exchange Board of India (SEBI) has proposed new changes to make share buybacks faster, more transparent, and easier for investors to track.
These updates were discussed with the Primary Market Advisory Committee (PMAC) and through internal reviews.
The goal is to improve how companies return money to shareholders while keeping the process smooth and fair in changing market conditions.
Faster Timeline for Share Buybacks
SEBI has suggested that companies can carry out open market buybacks through stock exchanges, but within a strict limit of 66 working days.
To ensure quicker action, the regulator has also proposed that at least 40% of the total buyback amount must be used in the first half of the buyback period.
However, PMAC had recommended a longer six-month timeline and a 50% early usage requirement.
SEBI believes a long process may reduce the effectiveness of buybacks and make it harder for investors to track progress, especially when market conditions change quickly.
New Rules for Promoters and Market Transparency
One of the major proposals is to restrict promoter activity during the buyback period. Shares held by promoters and their related parties may be frozen at the ISIN level.
This means promoters will not be able to buy or sell shares while the buyback is active, ensuring fair market conditions.
SEBI also wants to remove the need for a separate trading window for buybacks. This would allow transactions to take place through normal stock market systems.
In addition, companies may no longer need to show a special “company as buyer” tag on trading screens, making the process more seamless.
Investor Protection and Faster Communication
SEBI has also proposed a safeguard to ensure that buybacks do not violate minimum public shareholding rules.
Another important update is faster communication with investors. Companies will need to inform shareholders electronically about buyback offers within one working day of the public announcement.
This is aimed at improving transparency and helping investors react quickly to corporate actions.
Streamlining the Entire Buyback Process
To reduce delays and simplify operations, SEBI has also suggested:
Aligning the gap between two buyback offers with the Finance Act 2026
Making merchant banker appointments optional
Sharing responsibilities between companies, stock exchanges, and auditors
These steps aim to reduce dependence on intermediaries and make the process more efficient.
