SEBI Board to Revive Open-Market Buybacks on June 19

What SEBI is expected to decide on June 19

The Securities and Exchange Board of India (SEBI) is anticipated to approve a set of measures aimed at improving the ease of doing business at its board meeting scheduled for June 19. Published on June 14, 2026, the agenda spans market microstructure, product distribution, and compliance processes that affect listed companies, investors, and intermediaries. The most watched proposal is the return of open-market buybacks executed through the stock exchange mechanism, a route that was phased out earlier amid regulatory and tax-related concerns. SEBI’s current approach is to restore the mechanism but with tighter safeguards.

Alongside buybacks, the agenda includes speeding up the launch process for eligible alternative investment fund (AIF) schemes, simplifying documentation for transmission of securities to legal heirs, tweaks to ETF price band rules to aid price discovery, and allowing bond platforms to distribute SEBI-regulated products. Taken together, the measures signal a push toward faster approvals and clearer operational frameworks, while keeping stronger investor protection checks for areas that previously saw misuse concerns.

Open-market buybacks: why the route matters

An open-market buyback through stock exchanges allows a listed company to repurchase its own shares directly from the market. In practice, this route is often viewed as more flexible than a tender offer because the company can buy shares over a defined period through exchange trading systems, rather than running a one-time proportionate acceptance process.

SEBI is set to discuss and likely approve the return of this facility, positioning it as an additional method under the broader buyback regime. The mechanism had been phased out after concerns that the process could be drawn out or used in ways that did not treat shareholders uniformly in outcome, even if exchange access was formally open. SEBI’s renewed proposal is framed as a reinstatement of an earlier permitted mechanism, not a complete redesign, but with additional safeguards to close regulatory loopholes.

Why SEBI phased it out and why it is back on the table

The stock exchange route for open-market buybacks was phased out following regulatory and tax concerns. The provided context points to a phased discontinuation based on a 2023 amendment, with a glide path that reduced permissible sizes step-by-step, fully stopping from April 1, 2025.

SEBI’s rationale for reconsidering the mechanism is closely linked to the tax landscape changing in 2026. With effect from April 1, 2026, buyback proceeds are taxed as capital gains in the hands of shareholders, similar to a normal market sale. This change, effected through the Finance Act, 2026, is described as resolving earlier concerns around tax arbitrage and unequal outcomes between shareholders participating in buybacks and those selling in the open market.

Consultation papers and the feedback process

SEBI issued consultation papers on April 2, 2026 and May 8, 2026 proposing the reintroduction of open-market buybacks through stock exchanges. Public comments were sought on the proposal, including through timelines cited as April 23, 2026 and May 29, 2026 in the provided material.

The consultation framing emphasises that the earlier operational framework would continue, including the use of a separate buyback window, escrow requirements, and restrictions around bids, price, and volume. SEBI has also indicated that execution would occur through an order-matching mechanism, implying equal access for shareholders to place sell orders, while recognising that participation outcomes depend on price-time matching.

The tighter safeguards SEBI has proposed for buybacks

A central plank of the proposal is to reduce the scope for “announced but not executed” buybacks and to limit the ability to influence trading dynamics during the buyback period. SEBI’s proposed safeguards include:

• A shortened buyback execution period of 66 working days, compared with the earlier six-month window.
• A minimum utilisation requirement of about 40% of the buyback size within the first half of the execution period.
• Enhanced disclosure requirements, including daily disclosures referenced as part of the continuing framework.
• Restrictions on promoter participation, including a proposal that promoters and persons in control will not be permitted to sell shares into such buybacks, and a prohibition on purchases from promoters and promoter-associated entities during the buyback phase.
• Continuation of limits on price, volume, timing of orders, and escrow requirements.

These measures are designed to tighten market conduct controls while preserving the flexibility that listed companies seek when returning capital.

Other “ease of doing business” items on the board agenda

Beyond buybacks, SEBI’s board agenda, as described in the provided text, includes operational changes across multiple segments:

• Faster rollout for eligible AIF schemes: the timeline for launching eligible AIF schemes is proposed to be accelerated to about 10 working days.
• Simplified securities transmission to legal heirs: SEBI is looking to simplify documentation and raise thresholds, including a stated ₹30 lakh threshold for dematerialised holdings, while also indicating an increased threshold for other holdings (the exact figure is not fully specified in the provided text).
• ETF price discovery changes: amendments to the base price or price-band framework for ETFs to facilitate better price discovery.
• Bond platform distribution: permission for bond platforms to distribute SEBI-regulated products.

Key proposals at a glance

Timeline of how the buyback proposal evolved

Market impact: what changes if the exchange route returns

If approved, the return of exchange-based buybacks would give listed companies another capital return option alongside tender offers. The policy intent, as reflected in the consultation framing, is to provide flexibility while addressing earlier criticisms that buybacks could be used more as signalling tools than executed capital return programs. The 66 working days cap and the 40% utilisation requirement in the first half are specifically structured to make execution time-bound and measurable.

For investors, the promoter restriction is a key governance element because it reduces conflict-of-interest concerns during a period when the company is supporting demand for its shares. At the same time, participation in an exchange buyback remains dependent on market order matching. That means outcomes can differ from tender offers where shareholders typically participate proportionately, but SEBI is attempting to balance this with transparency and execution discipline.

Analysis: balancing flexibility with tighter enforcement

SEBI’s approach reflects a shift from outright removal of a mechanism to reinstatement with guardrails. The provided context links the change to the resolution of tax asymmetry through the Finance Act, 2026, which makes buyback taxation broadly similar to a regular market sale by taxing proceeds as capital gains for shareholders. That reduces the scope for tax-driven behaviour differences, which had previously been a major policy concern.

Operationally, the safeguards focus on three areas: speed (66 working days), seriousness of execution (minimum utilisation), and market integrity (promoter restrictions and enhanced disclosures). The agenda also indicates SEBI’s broader “ease of doing business” push, particularly by compressing timelines for eligible AIF scheme launches and simplifying processes like securities transmission, where documentation and thresholds can materially affect families and investors during succession events.

Conclusion: what to watch next

SEBI’s June 19 board meeting is expected to be a key milestone for the proposed return of open-market buybacks through stock exchanges, alongside a package of compliance and process reforms. The direction of travel is clear: faster approvals and simpler processes in areas like AIF launches and securities transmission, combined with stricter, more measurable rules where past frameworks raised fairness concerns. The next concrete step is the board’s decision and the final form of the safeguards that SEBI adopts, including the execution timeline, utilisation requirement, and promoter-related restrictions.