SEBI restores exchange buybacks: new 66-day rules 2026

What SEBI has cleared and why it matters

India’s market regulator, the Securities and Exchange Board of India (SEBI), has approved norms to reintroduce open-market share buybacks through stock exchanges. The framework is set to take effect from August 1, 2026. This is a reversal of SEBI’s earlier move to bar the open market buyback route via stock exchanges from April 1, 2025. The regulator’s updated approach keeps buybacks within the regular market, without requiring a dedicated buyback window. The change matters because it restores a familiar capital return route for listed companies, but with tighter execution rules and safeguards.

Key dates: ban, revival, and rollout

SEBI had previously decided to phase out buybacks through stock exchanges and then completely discontinue them from April 1, 2025. The latest decision revives this route, with the effective date now fixed as August 1, 2026. A Reuters report dated June 19 from Mumbai said the regulator approved the reintroduction on Friday and capped the duration at 66 working days. SEBI’s timeline also links buyback intervals to the Companies Act, 2013, instead of hardcoding a specific gap in the buyback regulations. As per the discussion in the provided text, the Companies Act currently specifies an interval of one year, and SEBI is aligning to whatever the Act provides.

How the exchange buyback will work in practice

Under the revived framework, open market buybacks through the stock exchange will be completed within 66 working days from the opening of the offer. SEBI has clarified that “working days” are not calendar days, and the definition of working days is included in the framework. Companies will be required to send intimation to shareholders regarding the open market buyback offer electronically. The separate trading window requirement is being dispensed with, meaning buyback orders will be placed in the normal trading window. SEBI also plans to discontinue the display of the company’s identity as purchaser on trading screens.

Price and order placement rules for buyback trades

SEBI’s norms allow a firm to repurchase its shares at any price ceiling within a 1% range over the last traded price. The regulator has also imposed specific restrictions on when bids can be placed during the trading session. Companies cannot place bids in the pre-open market, the first 30 minutes, and the last 30 minutes of the regular trading session. These execution constraints are intended to limit market impact during periods that can be more volatile or less price-discovery efficient. The framework also includes a trading volume cap to prevent buybacks from dominating daily activity.

Volume caps and utilisation thresholds

A company cannot buy more than 25% of the average daily trading volume, in value terms, of its shares or other specified securities. The reference period for this cap is the ten trading days preceding the day on which purchases are made. On fund utilisation, SEBI has stated that open market buybacks should be completed in 66 days, and at least 40% of the funds allocated must be utilised during the first half of the buyback period. The same 40% first-half utilisation requirement is reiterated in the updated framework described in the text. Together, the utilisation threshold and the shorter timeline compress execution and reduce the scope for long, drawn-out buybacks.

Safeguards: promoters, public float, and compliance checks

SEBI has approved safeguards that include freezing promoter holdings during the buyback period, implemented at the ISIN level for promoters and their associates. The framework also bars transactions that would breach the minimum public shareholding requirement, which is referenced as the 25% public float requirement. This means the buyback should not result in breach of minimum public shareholding norms. The regulator’s safeguards aim to ensure buybacks do not create unintended shifts in control or reduce public float below the mandated threshold. These checks sit alongside the execution rules to keep the mechanism orderly.

Where this fits among existing buyback routes

The text notes that buybacks can currently be undertaken through the tender offer route and the open-market route through book-building. With stock exchange buybacks returning from August 1, 2026, companies will again have a third operating mechanism, subject to SEBI’s revised constraints. Reuters also noted that the buybacks will be allowed in the regular market without a dedicated buyback window. The same report said the changes are expected to streamline buybacks by cutting costs and procedural hurdles, enabling faster execution and greater flexibility for companies. At the same time, SEBI has paired flexibility with promoter lock-ins and public float protections.

Broader regulatory guardrails referenced in the text

The provided material also lists several SEBI-linked and Companies Act-linked conditions that typically govern buybacks. It states that the upper limit of share buyback is 25% or less than the total of the paid-up capital and free reserves of the company. It also states that a buyback is not approved if the ratio of aggregate secured and unsecured debts is more than twice the paid-up capital and free reserves. The text adds that buyback of only fully paid-up shares and securities is permitted. It also notes that a company may not be allowed to purchase its own shares through a subsidiary company or an investment company, and that companies with certain defaults on repayments or redemptions will not be allowed to buy back shares.

Snapshot: the main operational rules

Market impact and what to watch next

The revived framework restores exchange-based buybacks after the April 1, 2025 discontinuation, but under a compressed 66-working-day timeline and tighter execution controls. For investors, the key practical indicators will be how quickly companies deploy the earmarked amount, given the requirement to utilise at least 40% in the first half of the buyback period. The volume cap and time-of-day restrictions may shape how buybacks are spread across sessions, especially for less liquid stocks. Promoter holding freezes and minimum public shareholding protections are likely to influence structuring decisions for companies with already tight public float levels. From August 1, 2026, companies considering this route will need to align buyback planning with the working-day clock, trading constraints, and compliance checks described in SEBI’s framework.