SEBI open-market buybacks return in 2026: 66-day rule

What SEBI has cleared, and why it matters

Securities and Exchange Board of India (SEBI) has approved the reintroduction of open market share buy-backs through the stock exchange route, with the framework coming into force from 1 August 2026. The decision brings back a capital-return option that had been shut earlier, and it does so with tighter execution and disclosure rules.

The regulator’s stated intent is to provide companies an additional buyback mechanism while reducing procedural complexity and strengthening investor protection. The revised framework also reflects changes in the taxation treatment of buybacks that were cited as a source of inequity in the earlier structure.

The 19 June 2026 SEBI board decision

On 19 June 2026, the SEBI board met and approved amendments to the SEBI (Buy-back of Securities) Regulations, 2018. One of the key outcomes was the clearance to re-introduce open market share buy-backs through the stock exchange.

Media reports also noted that the same board meeting approved other measures, including intraday borrowing by mutual funds and a simplified framework for transmission of securities. But the buyback decision drew immediate attention because it changes how listed companies can return capital and manage surplus cash.

When the new route becomes effective

SEBI has set 1 August 2026 as the effective date for open market buybacks through stock exchanges. Companies currently can undertake buybacks via the tender offer route and the open market route through book-building under the existing regulatory framework.

With the stock-exchange route returning from August, issuers will again be able to repurchase shares through regular market trades, subject to the updated guardrails.

Faster completion timeline: 66 working days

A major operational change is the execution timeline. The buyback process must be completed within 66 working days from the opening of the buyback.

This is a tighter window than the earlier framework, which had allowed a longer period. A faster timeline is intended to improve compliance on execution and reduce uncertainty around the pace of buyback activity.

Mandatory front-loading: 40% utilisation in the first half

SEBI has also required that at least 40% of the funds earmarked for the buyback must be utilised during the first half of the buyback period. In practice, this is meant to reduce the possibility of a buyback being announced but not meaningfully executed.

The rule keeps the focus on actual deployment rather than just authorisation, and it provides shareholders a clearer basis to track progress mid-way through the offer period.

Promoters barred, holdings frozen at ISIN level

Promoters are not allowed to participate in the open market buyback through stock exchanges. Separately, reports also noted that promoter and promoter group holdings will be frozen at the ISIN level during the buyback period, and that promoters’ shares remain locked during the buyback.

SEBI also said the route is being brought back with safeguards, including locking in promoter shares during buybacks and barring transactions that would breach the minimum 25% public float requirement.

Regular-market trading, no separate buyback window

SEBI has clarified that due to the revised taxation framework and because promoters are not permitted to participate, open market buybacks through stock exchanges will be treated as normal trading transactions.

As a result, the requirement for a separate trading window is being dispensed with. SEBI also said the display of the company’s identity as purchaser on the trade screen will be dispensed with under the revised approach.

Price and volume guardrails for daily execution

SEBI’s framework includes execution limits designed to prevent market disruption. As per SEBI, a firm can repurchase its shares at any price ceiling within the 1% range over the last traded price.

There are also participation and timing restrictions. A company cannot buy more than 25% of the average daily trading volume (in value) of its shares or other specified securities in the ten trading days preceding the day in which such purchases are made. Further, it cannot place bids in the preopen market, the first 30 minutes, and the last 30 minutes of the regular trading session.

Disclosures and shareholder communication

SEBI has required companies to provide buyback-related information to shareholders electronically. This is in addition to making a public announcement in a newspaper.

The combination of electronic shareholder communication and public announcement is intended to improve reach and standardise information flow around the offer.

One-year gap between buybacks aligned to Companies Act

SEBI has aligned the interval between two buybacks with the Companies Act, 2013. As per the Companies Act, 2013, the minimum interval between two buy-backs must be a year.

This alignment reduces regulatory ambiguity and ensures that listed companies follow a consistent cooling-off period for repeated buyback programs.

Tax changes cited as a reason for reintroduction

SEBI Chairman Tuhin Kanta Pandey said the reintroduction is being made in the context of the revised taxation framework applicable for buybacks. Separate reporting also noted that from April this year, buyback proceeds are taxed as capital gains in shareholders’ hands, similar to a normal market sale, and that the earlier inequity is no longer present.

The regulator and multiple reports linked the earlier closure of the stock-exchange route to taxation issues that had led to inequity.

Key rules at a glance

Market impact: what changes for issuers and investors

For companies, the return of the stock-exchange route restores a flexible way to buy shares in the market, now within a defined and faster execution schedule. The 66-working-day cap and the 40% first-half utilisation requirement are designed to make buybacks more time-bound and measurable.

For investors, promoter restrictions and the stated public-float safeguard are central to the new framework. SEBI’s rules also tighten how purchases can be executed, including limits on daily participation and restrictions on the most sensitive parts of the trading session.

Why the decision is a policy pivot

The open market buyback route through stock exchanges had been closed earlier, with reporting pointing to tax-related inequity as a key factor. The reintroduction, tied explicitly to a revised taxation framework and paired with promoter lock-in and execution limits, signals a regulatory attempt to balance flexibility with tighter monitoring.

The practical outcome is that buybacks can again be used as a capital-allocation tool through the stock exchange, but under rules that aim to reduce misuse and improve delivery against announced amounts.

Conclusion

SEBI’s approval brings open market share buybacks through stock exchanges back from 1 August 2026, with a 66-working-day completion requirement and a mandatory 40% utilisation in the first half of the offer period. Promoters are barred from participating, and holdings are to remain frozen at the ISIN level during the buyback period.

The market will now watch how listed companies adopt the reinstated route once it becomes effective, and how consistently issuers meet the tighter execution and disclosure requirements under the amended regulations.