SEBI Reintroduces Open Market Buy-Back Due to Tax Neutrality for Shareholders

Summary : The SEBI Board Memorandum proposes comprehensive amendments to the SEBI (Buy-Back of Securities) Regulations, 2018 by re-introducing open market buy-backs through stock exchanges from August 1, 2026, following changes in the buy-back taxation regime under the Finance Act, 2026. The proposal states that taxation is now largely neutral for public shareholders, removing the earlier inequity that led to discontinuation of this route. It also recommends dispensing with the separate trading window, mandating electronic intimation to shareholders, restricting the buy-back period to 66 working days, freezing promoters’ holdings at the ISIN level, ensuring minimum public shareholding compliance, and aligning the interval between successive buy-backs with the Companies Act, 2013. Importantly, based on stakeholder feedback, SEBI revised its original proposal to make the appointment of a Merchant Banker optional, allowing companies to decide whether to engage one while reallocating regulatory responsibilities to companies, auditors, compliance officers, and stock exchanges where no Merchant Banker is appointed.

Also Read SEBI Press Release No. 33/2026 Dated: 19/06/2026: SEBI Approves Major Regulatory Reforms to Simplify Securities Market Processes

Securities and Exchange Board of India

Dated: 19th June 2026

Re-introduction of Open Market Buy-Back through Stock Exchange and review of the SEBI (Buy-Back of Securities) Regulations, 2018

Objective

1.1. This memorandum seeks approval of the Board to re-introduce open market buy-back (hereinafter referred as ‘buy-back’) through stock exchanges as an additional method and to review of mandatory appointment of Merchant Banker under SEBI (Buy-Back of Securities) Regulations, 2018 (“Buy-Back Regulations”) and other provisions of Buy-Back Regulations to ensure ease of doing business by market participants.

Background

2.1. Modes of buy back –open market

2.1.1. In terms of Section 68(2)(f) of the Companies Act, 2013, buy-back of shares or other specified securities listed on any recognized stock exchange is required to be undertaken in accordance with the regulations framed by the Securities and Exchange Board of India (“SEBI”). This is in addition to the general framework provided in section 68(1) of the Companies Act, 2013.

2.1.2. The Buy-Back Regulations presently require mandatory appointment of a Merchant Banker for undertaking a Buy-Back. The Merchant Banker, inter-alia, is responsible for activities relating to filing of letter of offer, dissemination related activities, escrow account related compliances and ensuring compliances with regulatory requirements.

Methods for undertaking Buy-Back

2.1.3. In terms of Regulation 4(iv) of the Buy-Back Regulations, a company may undertake buy-back through any one of the following methods:

i. from the existing shareholders or other specified securities holders on a proportionate basis through tender offer; or

ii. from the open market through ‘book-building process’ or through ‘stock exchange’.

Discontinuation of Open Market Buy-Back through Stock Exchange-

2.1.4. Through an amendment to the Buy-Back Regulations dated February 07, 2023, the open market buy-back through stock exchange was phased out in a calibrated manner and was completely discontinued with effect from April 01, 2025.

2.1.5. At that time, taxation of buy-back was governed by section 115QA of the Income Tax Act, 1961 which required the company to pay buy-back tax, with no tax liability in the hands of shareholders on gains made by successful participants

2.1.6. While all shareholders were provided an opportunity to tender their shares under the tender offer route, inequity was inherent in the open market buy­back mechanism, as the company’s purchase orders could get matched with only one or a few shareholders, thereby depriving other shareholders desirous of participating in the buy-back. Consequently, acceptance depended on the price-time order matching mechanism rather than an equitable process.

2.1.7. It was also acknowledged that, since buy-backs are taxed in the hands of the company and not the shareholders tendering their shares, the tax burden is effectively borne by the remaining shareholders. In this regard, SEBI also referred the matter to the Ministry of Finance for considering appropriate amendments to the relevant provisions of the Income Tax Act to address this anomaly.

2.1.8. In view of the above, the Board had approved the amendments to Buy-Back Regulations and accordingly a glide path, as under, was introduced to phase out the open market buy-back through stock exchange:

Parameter	Till March 31, 2023	w.e.f. April 01, 2023	w.e.f. April 01, 2024	w.e.f. April 01, 2025
Maximum limit	15%	10%	5%	0
Time period for completion	6 months	66 working days	22 working days	NA

2.1.9. While approving the phased discontinuation of open market buy-back through stock exchange, the Board had, in terms of Regulation 16(i) of the Buy-Back Regulations, mandated creation of a separate window by the concerned stock exchange for execution of buy-back during the specified period till March 31, 2025. The said window was intended to facilitate implementation of buy-back from open market through stock exchange during the transitional phase. The special window was required otherwise it was difficult to identify the shareholder whose shares were bought back by the Company. This identification was essential due to exemption available to such shareholders as per the extant law.

Recent changes in the Buy-Back Taxation Framework-

2.1.10. With the new Income Tax Act, 2025 and amendments introduced through the Finance Act, 2026, buy-back proceeds are now taxed in the hands of shareholders as capital gains, thereby making the tax treatment of buy­back transactions similar to the normal market transactions for shareholders other than promoters.

2.1.11. In case of promoters’ shares, the effective tax rate will be 22% for corporate promoters and 30% for other than corporate promoters.

2.1.12. Given the above, it was decided to revisit the introduction of the open market buy back and its allied provisions.

2.2. Appointment of Merchant Banker

Existing Provisions:

2.2.1. The Buy-Back Regulations require mandatory appointment of a Merchant Banker for undertaking a Buy-Back. As mentioned above the Merchant Banker, inter-alia, is responsible for activities relating to filing of letter of offer, dissemination related activities, escrow account related compliances.

2.2.2. The securities market ecosystem has evolved significantly over the years through continuous disclosure mechanisms and enhanced governance framework. Listed companies undertaking buy-back are already subject to detailed disclosures and governance requirements under SEBI Regulations.

2.2.3. The Board of Directors continue to remain responsible for correctness of disclosures, compliance with statutory requirements, solvency declaration, extinguishment of securities etc. in respect of compliance with the Buy-Back Regulations.

2.2.4. Several responsibilities presently undertaken by Merchant Bankers under the Buy-Back Regulations are procedural and operational in nature that may be performed by the Company itself.

2.2.5. Mandatory appointment of Merchant Banker in all buy-back offers, particularly small buy-back offers undertaken by listed entities, results in increased costs to listed entities. Thus disintermediation would help the listed companies.

2.3. Issuance of Consultation Papers inviting public comments:

2.3.1. In view of the recent changes in the taxation framework governing buy­back, and representations received from various stakeholders including industry associations, a need was felt to review the re-introduction of open market buy-back through stock exchange.

2.3.2. Accordingly, SEBI issued a consultation paper dated April 02, 2026 inviting public comments on the proposal (Annexure I). Simultaneously, the proposal was deliberated by the Primary Market Advisory Committee (PMAC) for its recommendations.

2.3.3. PMAC, while agreeing with the proposal for re-introduction of Open Market Buy-Back through Stock Exchange, recommended certain additional measures with a view to further strengthen the buy-back framework.

2.3.4. In the same meeting the issue of doing away with the mandatory appointment of the merchant banker was discussed in passing, where the general opinion was not in agreement with the proposal. However, given that the proposal was in the interest of ease of doing business and reducing costs to the listed company it was decided to seek public comments on the proposal.

2.3.5. Pursuant thereto, SEBI issued another consultation paper dated May 08, 2026, seeking public comments on the additional measures recommended by the PMAC and SEBI (Annexure II).

2.3.6. In response to the aforesaid consultation papers, total 234 comments (99 and 135 in respect of 1st and 2nd consultation papers respectively) have been received. The commenters include industry associations, intermediaries, individuals and professional institutions etc. While majority of the comments are broadly in support of the proposals in the consultation papers, some suggestions on the proposals have also been received from these entities. The details of the comments of all the stakeholders is placed at Annexure-IIIA and IIIB. The summary of public comments proposal wise is as under:

Sr. No	Proposal	Total comment s received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
1.	Re-introduction of Open Market Buy-Back through Stock Exchange	97	55	1	41
2.	Intimation to Shareholders regarding buy-back offer	20	16	3	1
3.	Duration of the Open Market Buy-Back offer on Stock Exchange	20	13	6	1
4.	Requirement of Separate Trading Window	19	16	2	1
5.	Restrictions on Promoter/ Promoter Group participation	19	14	4	1
6.	Minimum Public Shareholding Compliance	19	13	2	4
7.	Interval between two Buy- Back offers	18	17	1	0
8.	Appointment of Merchant Banker	20	6	6	8

2.3.7. The analysis of public comments, recommendations of PMAC, SEBI’s views and the proposals for consideration of Board are discussed in the following paragraphs.

Re-introduction of Open Market Buy-Back through Stock Exchange

3.1. Recommendations of PMAC: The Committee has recommended the re- introduction of Open Market Buy-back through stock exchange mechanism with certain additional measures, which have been dealt with in below paragraphs.

3.2. Analysis of public comments:

3.2.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total comment s received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
Re-introduction of Open Market Buy-Back through Stock Exchange	97	55	1	41

3.2.2. From the above, it can be seen that, majority of comments are in support of proposal. Out of 41 disagreements, it is seen that 12 have not provided any rationale for disagreement. Another 20 while not having provided any specific rationale for disagreement, have however commented either to keep only tender route or commented that it is not beneficial to small investors. From their comments it appears that these commentators were not able to fully appreciate the tax neutrality pursuant to recent changes in Income Tax Act 2025. These are specifically highlighted in the tabulation in annexure.

3.2.3. Remaining 9 commenters who have raised concerns have broadly mentioned that the company should not be allowed to cancel or delay the buy-back once it is announced, Open market route lacks a guaranteed reservation for small/retail investors, share prices tends to rise immediately after the buy-back announcement, however, once it is clarified that the buy-back will be undertaken through open market method, prices tends to fall drastically.

3.2.4. The comments have been examined and it is noted that reintroduction of open market buy-back through stock exchange does not affect the option of under taking buy-back through tender offer route and the same will provide companies with additional mechanism for undertaking buy-backs.

3.2.5. Further, objective of buy-back is to return surplus funds to shareholders which is not confined to any particular class of investors and with the tax being treated at the hands of the investors as capital gains, there remains no advantage or disadvantage to any investor (except the promoter) as to whether the shares are bought by the Company under Open Market Buy-Back or by a normal purchase.

3.2.6. Regulation 24(i)(d) of the Buy-Back Regulations stipulates that the company shall not withdraw the buy-back offer once the public announcement is made or the draft letter of offer is filed with the Board. Further, the requirement that the buy-back be completed within a specified time period ensures certainty in its execution / implementation.

3.2.7. The mechanism of open market buy-back through stock exchange is operationally different from the tender method, as it operates on a price-time priority matching system, just like normal buying and selling. Accordingly, the concept of reservation is not feasible under the open market method.

3.2.8. The stated concern with respect to rise in price of shares after announcement is not factually substantiated. In this regard, a study has been undertaken based on the data obtained from the Stock Exchanges (15 buy-back offers have been selected on sample basis in the last three years). The analysis did not conclude consistent or uniform trend across buy-back offers (both tender method and open market method). It is also observed that share prices do not invariably increase upon announcement of buy-back nor do they necessarily fall upon disclosure of the method of buy-back.

3.2.9. In light of the recent amendments in the taxation on buy-back introduced by the Finance Act, 2026, the differential tax still exists for promoter shareholders participating in Buy-Back, however, anyway the promoters are not allowed to participate in Open Market Buy-Back through Stock Exchanges.

3.2.10. Shifting of tax burden from the Company undertaking buy-back to the public shareholders participating in buy-back, has made selling in normal market equal to selling in buy-back through stock exchange. The re­introduction of this method of buy-back would provide companies with an additional mechanism for undertaking buy-back, while ensuring equitable opportunity and treatment of taxation for public shareholders.

3.2.11. While re-introducing the open market buy-back, the other requirements for open market buy-back provided in ‘Chapter-IV’ of Buy-Back Regulations, such as restriction on promoter participation, making comprehensive disclosures, public announcement, filing of the copy of public announcement with the Board and the Stock Exchanges, opening of Escrow account etc. may also be re-introduced subject to additional proposals in this Memorandum.

3.3. Proposal:

3.3.1. It is proposed that the method of ‘buy-back of shares or other specified securities from open market through stock exchange’ may be re­introduced with effect from August 01, 2026 by suitably amending the proviso to regulation 4(iv) of Buy-Back Regulations.

3.3.2. It is further proposed that, ‘Chapter-IV’, ‘Buy-Back from the Open Market’ and all other relevant Regulations of the SEBI (Buy-Back of Securities) Regulations, 2018 and circulars governing the buy-back from open market through stock exchange shall remain applicable pursuant to the re­introduction of open market buy-back through stock exchange subject to the other amendments proposed in this Memorandum.

4. Intimation to Shareholders regarding open market buy-back offer

4.1. Existing Provisions:

4.1.1. In terms of Regulation 16(iv)(b), the company is required to make a public announcement within two working days from the date of declaration of results of the postal ballot for special resolution / board of director’s resolution. The company is further required to file a copy of the same with the Board and the Stock Exchanges. Such public announcement is required to be placed on the respective websites of the Stock Exchanges, Merchant Bankers and the Company and is disseminated to the public.

4.2. Recommendations of PMAC:

4.2.1. The Committee recommended that the buy-back intimation, along with a copy of public announcement, may be sent through electronic mode within one day from the date of public announcement. For this purpose, the shareholders as on the date of public announcement may be considered. This would ensure that all the shareholders are duly informed in a timely manner and are made aware about the open market buy-back through stock exchange.

4.3. Analysis of Public Comments:

4.3.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
Intimation to Shareholders regarding buy-back offer	20	16	3	1

4.3.2. From the break-up, it can be seen that, majority of comments are in support of proposal. One comment is in disagreement with the proposal, where the concern articulated by person is that there is at present robust framework for dissemination of public announcement on the websites of stock exchanges, Company and Merchant Banker. Therefore, instead of a mandatory requirement it is suggested that sending electronic intimations directly to shareholders be made voluntary for Listed Companies as this results in duplication of the disclosures.

4.3.3. In this regard, it may be noted that, direct electronic communication would facilitate wider awareness amongst shareholders and ensure that shareholders are informed of the buy-back offer in a timely manner.

4.3.4. After considering the recommendations of PMAC and public comments for wider and timely dissemination of information to shareholders, as an additional safeguard, companies may intimate shareholders regarding the buy-back offer through electronic mode. Such requirement would enhance shareholder awareness and facilitate informed participation in the buy­back offer.

4.4. Proposal:

In view of the above, it is proposed that the company may be mandated to send an intimation through electronic mode regarding the open market buy-back offer to those who are shareholders as on date of public announcement within one working day of such public announcement.

5. Duration of the Open Market Buy-Back offer on Stock Exchange

5.1. Existing Provisions:

5.1.1. In terms of Regulation 17(ii) of Buy-Back Regulations, the closure timelines subsequent to the calibrated glide path towards discontinuation of the stock exchange method, were gradually reduced from six months to 66 working days to 22 working days, before the method was discontinued with effect from April 01, 2025.

5.2. Recommendations of PMAC:

5.2.1. The Committee recommended that the maximum duration for which the buy-back may remain open may be prescribed as six months, in line with the earlier framework. The Committee further recommended that in view of the longer duration i.e. six months, the existing requirement under Regulation 15(ii) of Buy-Back Regulations relating to utilization of minimum ‘forty per cent’ of the amount earmarked for buy-back within the initial half of the specified duration maybe increased to ‘fifty percent’.

5.3. SEBI has examined the recommendations of PMAC and views of SEBI on the recommendations are as follows:

5.3.1. While PMAC has recommended a maximum duration of six months for completion of buy-back offers, it is observed that such a timeline seems relatively long from the point of timely implementation of buy-back. Further, such long period may make buy-back irrelevant in the context of the developments that may happen during these six months and would also be cumbersome for shareholders to keep a track on the same as the corporate action will remain open for period of 6 months. This will also result in a corporate action being open for too long and would be stale and resultantly would become irrelevant.

5.3.2. It is also noted that the regulatory framework governing buy-back under the Companies Act is undergoing changes pursuant to amendments introduced under the Companies Law Amendment Bill, 2026 with respect to the permissible gap between two buy-back offers. These changes necessitate a balanced approach to ensure timely execution of the buy­back offers.

5.3.3. Accordingly, it is considered appropriate that the maximum duration for completion of open market buy-back through stock exchange may be prescribed as 66 working days, which would be more aligned with the objective of ensuring timely execution while providing adequate flexibility to issuers and in the interest of the shareholders.

5.3.4. Further, in view of the proposed duration of ‘66 working days’, it is considered appropriate to retain the existing requirement relating to utilization of minimum ‘forty percent’ of the amount earmarked for buy-back within the initial half of the specified duration.

5.4. Analysis of Public Comments:

5.4.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreemen t	No. of comments in dis- agreement
Duration of the open market Buy-Back offer on Stock Exchange	20	13	6	1

5.4.2. From the break-up, it can be seen that, majority of comments are in support of proposal. One of the commenter has raised the concern that mandatory utilization limit of 40% during first half of buy-back period may be relaxed and timeline of 66 working days may be increased to 90 days.

5.4.3. In this regard, it may be noted that, the proposed timeline of 66 working days seeks to maintain a balance between providing adequate flexibility to issuers and ensuring timely completion of the buy-back process. A longer timeline may dilute the objective of timely execution of buy-back offers and prolong uncertainty for investors.

5.4.4. Further, retention of the existing requirement relating to utilization of a minimum of forty percent of the amount earmarked for buy-back during first half of the offer period would continue to ensure meaningful progress and phased implementation of buy-back during the initial period. Accordingly, the proposal provides an appropriate balance between issuer flexibility, timely execution of buy-back and investor interests.

5.5. Proposal:

In view of the above, it is proposed that open market buy-backs through the stock exchange mechanism shall be completed within 66 working days from the date of opening of the offer. Further, the existing requirement of utilizing at least 40% of the buy-back size during the first half of the offer period may be retained.

6. Requirement of Separate Trading Window

6.1. Existing Provisions:

6.1.1. While approving the phased discontinuation of open market buy-back through stock exchange, the Board had, in terms of Regulation 16(i) mandated creation of a separate window by the stock exchanges for execution of buy-back.

6.1.2. SEBI, in its consultation paper dated April 02, 2026 proposing re­introduction of Open Market Buy-Back through Stock Exchanges, had provided that the existing framework for buy-back form open market through stock exchange as provided in Regulations and Circulars inter-alia including requirement relating to separate trading window would continue to be applicable. The proposal was then simultaneously placed before PMAC for its deliberations and recommendations.

6.2. Recommendations of PMAC:

6.2.1. The Committee recommended that such a separate window by stock exchanges may no longer be necessary, and that buy-back transactions may instead be executed through the normal trading mechanism. The separate window was primarily introduced to identify investors eligible for beneficial tax treatment. Since such tax benefits are no longer available, investors participating in Buy-Backs and regular market investors are now subject to the same tax treatment. Further, the requirement under Regulation 17(i) relating to the display of the company’s identity on the electronic screen as purchaser when order is placed may now not be required.

6.2.2. Accordingly, it was considered appropriate to dispense with the requirement of a separate trading window and permit execution of buy­back transactions through the normal trading mechanism. Further, since buy-back transactions would be executed through the normal trading mechanism, the requirement relating to display of the company’s identity as purchaser on the electronic screen is also no longer considered unnecessary.

6.2.3. In view of the above, SEBI issued consultation paper dated May 08, 2026 proposing for dispensation of requirement of separate trading window along with display of the identity of company on electronic screen as purchaser.

6.3. Analysis of Public Comments:

6.3.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
Requirement of Separate Trading Window	19	16	2	1

6.3.2. From the break-up, it can be seen that, majority of comments are in support of proposal. One of the commenter has raised the concern that complete removal of visibility mechanisms may reduce transparency, investors knowledge and market surveillance.

6.3.3. In this regard, it may be noted that, once the separate trading window is dispensed with, there would not be any difference between orders executed under open market buy-back and normal trades. This is as per the principle of anonymity followed under normal trading mechanism. Therefore, separate identification mechanism may not be necessary.

6.3.4. Further, under existing Open Market buy-back framework, Companies are already required to submit information regarding the shares or specified securities bought – back, to the stock exchange on a daily basis in such form as may be specified by the Board and the stock exchange shall upload the same on its official website immediately.

6.4. Proposal:

In view of the above, it is proposed that while re-introducing the open market buy-back through the stock exchange, the requirement of separate window and display of the identity of the company on electronic screen as a purchaser may be dispensed with.

7. Restrictions on Promoter/ Promoter Group participation

7.1. Existing Provisions:

7.1.1. Regulation 24(i)(e) of the Buy-Back Regulations, provides that the promoter(s) or his/their associates shall not deal in the shares or other specified securities of the company in the stock exchange or off-market, including inter-se transfer of shares among the promoters during the period from the date of passing the resolution of the board of directors or the special resolution, as the case may be, till the closing of the offer. This is applicable to all methods of buy-back.

7.2. Recommendations of PMAC:

7.2.1. The Committee recommended that all the securities of the company for which it is undertaking buy-back, held by the promoters and their associates be frozen at the ISIN level during the buy-back period as an additional safeguard.

7.2.2. Based on the recommendations of PMAC, SEBI issued consultation paper dated May 08, 2026, proposing freezing of the shares or other specified securities held by promoters and their associates at ISIN level during buy­back period.

7.2.3. The consultation paper noted that, in order to further strengthen the existing safeguards and ensure effective implementation of such restriction, it was considered appropriate to mandate freezing of the shares or other specified securities held by the promoters and their associates at the ISIN level during the buy-back period. Such measure would act as an additional safeguard against any dealing in securities during the restricted period.

7.2.4. However, since promoters are permitted to participate in buy-back undertaken through the tender offer method, such freeze would not apply for the limited purpose of tendering shares in the buy-back. Further, promoters participating in tender offer buy-backs would continue to be subject to the applicable taxation framework introduced under the Finance Act, 2026.

7.3. Analysis of Public Comments

7.3.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of omments in agreement	No. of comments in partial agreement	No. of comments in dis- agreemen t
Restrictions on Promoter/ Promoter Group participation	19	14	4	1

7.3.2. From the break-up, it can be seen that, majority of comments are in support of proposal.

7.3.3. One of the entity has commented that blanket ISIN level freeze may obstruct genuine transactions such as pledge invocation and release, succession, court, approved arrangements, financing actions and permitted transactions such as subsisting obligations, accordingly the proposal may be reconsidered in its present form.

7.3.4. In this regard, it is noted that, the ISIN level freeze would apply to the shares which are already issued and are being bought back. Shares arising out of the subsisting obligations (warrants, convertibles etc.) would not be impacted as freeze is applicable on debit of shares from demat account. With respect to succession/court approved arrangements, the same will be required to be implemented in terms of the extant laws and no specific carve out may be required in Buy-Back regulations.

7.3.5. Further, invocation of encumbrances may be allowed subject to freeze continuing in the name of transferee. Operational mechanism is already in place for activating freezes in case of to be listed securities. The same shall be detailed in circular to be issued in the matter.

7.3.6. Accordingly, the proposal does not result in any substantive change in the rights or obligations of promoters and their associates and merely provides an additional mechanism for enforcement of the existing regulatory restriction.

7.4. Proposal:

7.4.1. In view of the above, it is proposed that the shares or other specified securities of the company for which it is undertaking buy-back, held by the promoters and their associates shall remain frozen at the ISIN level during the buy-back period. The company shall provide necessary instructions to the depositories for such freezing.

7.4.2. Since promoters are allowed to participate in buy-backs through ‘Tender Offer’ method, such freeze would not be applicable for limited purpose of tendering such shares in buy-back.

7.4.3. Further, transfer of shares or other specified securities pursuant to invocation of encumbrances created on shares or other specified securities prior to the commencement of buy-back period may be allowed subject to freeze continuing in the name of transferee during the buy-back period. The operational mechanisms shall be detailed in circular to be issued in the matter.

8. Minimum Public Shareholding Compliance

8.1. Existing Provisions:

8.1.1. The requirement relating to Minimum Public Shareholding (MPS) is prescribed under the Securities Contracts (Regulation) Rules, 1957 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. However, the Buy-Back Regulations does not contain an explicit provision aligning the buy-back transactions with compliance of MPS requirements.

8.2. Recommendations of PMAC:

8.2.1. The Committee recommended to introduce an explicit provision for the requirement of Minimum Public Shareholding (MPS) in the context of buy- back under the Buy-Back Regulations.

8.2.2. Accordingly, it was proposed in the consultation paper dated May 08, 2026 that, in the Buy-Back Regulations explicit provision may be introduced stating that the company / issuer should not announce any buy-back, (through open market or tender method) that may result in breach of MPS requirements.

8.3. Analysis of Public Comments:

8.3.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreemen t
Minimum Public Shareholding Compliance	19	13	2	4

8.3.2. From the break-up, it can be seen that, majority of comments are in support of proposal. Four commentators have raised concern that introducing a similar provision in the Buy-Back Regulations would result in regulatory duplication without providing any additional regulatory benefit. Temporary breach of MPS resulting from a buy-back should be permitted subject to restoration of compliance within a specified timeline as the same is not within the control of the company and it would prevent companies with high promoter shareholding from undertaking buy-backs.

8.3.3. While compliance with Minimum Public Shareholding (MPS) requirements is prescribed under the existing legal framework, the proposed provision seeks to explicitly incorporate the requirement within the Buy-Back Regulations to provide regulatory clarity and ensure that buy-back transactions are undertaken in a manner consistent with the MPS framework.

8.3.4. Buy-back is a voluntary corporate action undertaken at the discretion of the company. Accordingly, the company is expected to appropriately determine the size and structure of the buy-back after taking into account the applicable regulatory requirements, including compliance with MPS norms.

8.3.5. Further, while buy-backs serve as a mechanism for distribution of surplus funds and creation of shareholder value, the same must be balanced against the objective of ensuring adequate public float and market liquidity.

8.4. Proposal:

In view of the above, it is proposed to insert a suitable provision in the SEBI (Buy-Back of Securities) Regulations, 2018 specifying that the company / issuer should not announce any buy-back, (through open market or tender method) which may result in breach of MPS requirements.

9. Interval between two Buy-Back offers

9.1. Existing Provisions:

9.1.1. In terms of Regulation 4(vii) of the Buy-Back Regulations, a company cannot make any offer of buy-back within a period of one year reckoned from the date of expiry of the buy-back period of the preceding offer of buy-back.

9.2. Recommendations of PMAC:

9.2.1. The Committee recommended that the requirement relating to minimum gap between two buy-back offers under Buy-Back Regulations may be aligned with the provisions of the Companies Act. This would ensure that any amendments to the Companies Act are automatically reflected, thereby maintaining consistency and avoiding the need of corresponding amendments under Buy-Back Regulations. This proposal was thus included in the consultation paper dated May 08, 2026.

9.3. Analysis of Public Comments:

9.3.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
Interval between two Buy-Back offers	18	17	1	0

9.3.2. From the break-up, it can be seen that, majority of comments are in support of proposal. One commenter who has partially agreed with the proposal has commented that the only shortcoming of the proposal is the lack of cross-reference; alignment without identifying the relevant provision of the Companies Act simply passes the problem down the line.

9.3.3. In this regard, it may be noted that, the reference to Companies Act is proposed from the ease of doing business point of view so that flexibility is available to the company and the interval is aligned with the parent law without requiring any changes in the regulations in future. Thus cross reference to companies act for this purpose may not be required.

9.3.4. Accordingly, it is considered appropriate to align the interval between two buy-back offers under the Buy-Back Regulations with the provisions of the Companies Act, 2013. Such alignment would ensure regulatory consistency, provide legal certainty and facilitate ease of compliance for listed entity

9.4. Proposal:

In view of the above, it is proposed to amend the clause (vii) of Regulation 4 of the SEBI (Buy-Back of Securities) Regulations, 2018 and specify that the interval between two buy-backs by a company shall be in accordance with the interval as specified in Companies Act, 2013 for unlisted company.

10. Appointment of Merchant Banker

10.1. The Buy-Back Regulations require mandatory appointment of a Merchant Banker for undertaking a Buy-Back. As mentioned above at para 2.2 and 2.3.4, the role of the Merchant Banker was reviewed and in the interest of ease of doing business and reducing costs to the listed company it was decided to seek public comments on the proposal of dispensing with the mandatory appointment of merchant bankers in buy-backs.

10.2. Analysis of Public Comments:

10.2.1. The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
Appointment of Merchant Banker	20	6	6	8

10.2.2. From the break-up, it is observed that out of 8 disagreements 5 are merchant bankers who are directly impacted by the proposal and it is natural for them to disagree/oppose.

10.2.3. One of the commenters has mentioned that Merchant Bankers brings independent oversight in the buy-back process. Further, both the exchanges have specifically provided their views with respect to assignment of escrow management to them citing that escrow oversight requires continuous monitoring of fund adequacy, coordination with banks, handling of invocation and release conditions, verification of compliance with regulatory requirements and ensuring implementation accountability. These functions involve independent supervision and transactional responsibility which are integral functions of Merchant Bankers.

10.2.4. In order to address this concern, the proposal seeks to bring in independence in nature of professionals such as company secretaries, statutory auditors which the company is anyway used to dealing with and is well versed with the affairs of the company. In this regard it is mentioned that while distributing the activities of Merchant Bankers among the company, secretarial auditor, it is ensured that the activities which require independence has been assigned to independent entities. Further, considering the views of the Stock Exchanges, the responsibilities regarding management of Escrow account may be assigned to Statutory Auditors of the Company.

10.2.5. There were suggestions that threshold based framework may be considered, whereby Merchant Banker appointment remains mandatory for smaller companies or companies lacking adequate capital markets expertise or for larger buy-backs which involves complex transaction. In this regard, it is noted that the nature of regulatory obligations under Buy-Back regulations does not materially vary based on the size of the buy­back. Therefore, introducing differentiated requirements based on the size of the buy-back may result in regulatory complexity.

10.2.6. The Exchanges have also pointed out that they are not equipped with process of providing certifications regarding adequacy of sell orders and VWAP of shares. In this regard, it may be noted that exchanges are repositories of this data and they are best placed to certifications regarding adequacy of sell order and VWAP of shares.

10.2.7. In view of the above, the list of activities that are being reassigned to Company, Secretarial Auditor, Compliance Officer, Stock Exchanges and Statutory Auditors are as under (the details of this placed at Annexure IV).

Sr. No	Responsibilities of MBs as per current regulatory framework	Activities proposed to be assigned to
1.	Appointment of Merchant Banker	NA
2.	Filing of letter of offer and Public Announcement along with Fees in accordance with the terms of the Regulations and ensuring that their contents are true, fair and adequate.	Company
3.	Certifying that the buy-back offer is complying with regulations and Due diligence certification	Secretarial Auditor
4.	Oversight and operation of escrow accounts including bank guarantees, cash deposits, approved securities, invocation rights and release of escrow account and forfeiture-related directions by SEBI.	Statutory Auditor
5.	Certification relating to adequacy of sell orders and VWAP of shares or other specified securities	Stock Exchanges
6.	Presence during extinguishment/destruction of securities in case of Tender offer	NA
7.	Presence during extinguishment/destruction of securities in case of buy-back through open market	Compliance officer
8.	Certification/verification of compliance with extinguishment of securities	Compliance officer
9.	Submission of final report	Company
10.	Ensuring availability of funds and firm financial arrangements for implementation of the buy-back	Company
11.	Compliance with relevant provisions of Companies Act, 2013	Company
12.	Disclosure of Public Announcement on website of Merchant Bankers	NA

10.3. Proposal:

10.3.1. In view of the above, it is proposed to dispense with the requirement of mandatory appointment of a Merchant Banker by the company for undertaking buy-back of shares or other specified securities.

10.3.2. Further, it is proposed to assign the activities which are presently carried out by the Merchant Banker to the Company, Stock Exchanges, Compliance Officer, Statutory Auditor and Secretarial Auditor.

11. Proposal to the Board:

11.1. The Board is requested to consider and approve:

11.1.1. the proposals mentioned under paras 3.3.1, 3.3.2, 4.4, 5.5, 6.4, 7.4.1, 7.4.2, 7.4.3, 8.4, 9.4, 10.3.1 and 10.3.2, which would require amendments to the SEBI (Buy-Back of Securities) Regulations, 2018.

11.1.2. the proposed draft amendments to SEBI (Buy-Back of Securities) Regulations, 2018 are placed at Annexure V.

11.1.3. the proposed draft amendments shall come into force with effect from August 1, 2026.

11.2. The Board is also requested to authorize the Chairman to carry out suitable amendments to the regulations and to take any other consequential or incidental steps for implementation of decisions of the Board.

Enclosures:

1. Annexure I – Consultation Paper I (Pages 1 to 15)

2. Annexure II – Consultation Paper II (Pages 1 to 10)

3. Annexure IIIA – Details of public comments (Pages 1 to 10)

4. Annexure IIIB – Details of public comments (Pages 1 to 14)

5. Annexure IV – Assignment of activities which are carried out by the Merchant Banker to Company, Compliance officer Stock Exchanges, Statutory Auditor and Secretarial Auditor (Pages1 to2)

6. Annexure V – Draft Amendments to SEBI (Buy-Back of Securities) Regulations, 2018 (Pages 1 to 9)

Addendum: Re-introduction of Open Market Buy-back through Stock Exchanges and Review of the SEBI (Buy-back of Securities) Regulations, 2018.

1. Addendum to Para 9: Interval between two Buy-Back offers of the Board Memorandum:

1.1. The para 9.4 of the Board Memorandum reads as follows:

9.4. “In view of the above, it is proposed to amend the clause (vii) of Regulation 4 of the SEBI (Buy-Back of Securities) Regulations, 2018 and specify that the interval between two buy-backs by a company shall be in accordance with the interval as specified in Companies Act, 2013 for unlisted company.”

1.2. Based on internal discussions, it is proposed that, in the para 9.4 of the Board memorandum, the words “for unlisted company” may be omitted. Accordingly, the revised proposal may be read as under:

9.4. Proposal:

“In view of the above, it is proposed to amend the clause (vii) of Regulation 4 of the SEBI (Buy-Back of Securities) Regulations, 2018 and specify that the interval between two buy-backs by a company shall be in accordance with the interval as specified in Companies Act, 2013.”

2. Addendum to Para 10: Appointment of Merchant Banker of the Board Memorandum:

2.1. Based on the internal discussions and feedback received from the stakeholders/commenters, the proposal mentioned at para 10 of the board memorandum is reexamined. The revised para 10.2 and 10.3 of the Board Memorandum is as under:

“10.2 Analysis of Public Comments:

10.2.1 The break-up of the comments received from public on the proposal are as under:

Proposal	Total commen ts received	No. of comments in agreement	No. of comments in partial agreement	No. of comments in dis- agreement
Appointment of Merchant Banker	20	6	6	8

10.2.2 From the break-up, it is observed that out of 8 disagreements 5 are merchant bankers who are directly impacted by the proposal and it is natural for them to disagree/oppose.

10.2.3 One of the commenters has mentioned that Merchant Bankers brings independent oversight in the buy-back process. Based on the feedback it is specifically provided that proposal to appoint merchant banker is optional which is discussed in later paras.

10.2.4 Both the exchanges have specifically provided their views with respect to assignment of escrow management to them citing that escrow oversight requires continuous monitoring of fund adequacy, coordination with banks, handling of invocation and release conditions, verification of compliance with regulatory requirements and ensuring implementation accountability. These functions involve independent supervision and transactional responsibility which are integral functions of Merchant Bankers.

10.2.5 In order to address this concern, the proposal seeks to bring in independence in nature of professionals such as company secretaries, statutory auditors which the company is anyway used to dealing with and is well versed with the affairs of the company. In this regard it is mentioned that while distributing the activities of Merchant Bankers among the company, secretarial auditor, it is ensured that the activities which require independence has been assigned to independent entities. Further, considering the views of the Stock Exchanges, the responsibilities regarding management of Escrow account may be assigned to Statutory Auditors of the Company.

10.2.6 There were suggestions that threshold based framework may be considered, whereby Merchant Banker appointment remains mandatory for smaller companies or companies lacking adequate capital markets expertise or for larger buy-backs which involves complex transaction. In this regard, it is noted that the nature of regulatory obligations under Buy-Back regulations does not materially vary based on the size of the buy-back. Therefore, introducing differentiated requirements based on the size of the buy-back may result in regulatory complexity.

10.2.7 The Exchanges have also pointed out that they are not equipped with process of providing certifications regarding adequacy of sell orders and VWAP of shares. In this regard, it may be noted that exchanges are repositories of this data and they are best placed to certifications regarding adequacy of sell order and VWAP of shares.

10.2.8 Further, suggestions were received that instead of dispensing with mandatory appointment of Merchant Banker, the appointment can be made optional at the discretion of the Company, allowing companies to engage a merchant banker based on the nature and complexity of the buy-back transaction. Accordingly, in view of the suggestions/comments received, it is proposed to suitably modify the proposal and make the appointment of Merchant Banker optional. This approach would provide flexibility to listed companies to avail the services of a Merchant Banker, where considered necessary, while reducing mandatory compliance requirement and ensuring ease of doing business.

10.2.9 In view of the above, in case Company decides not to appoint Merchant Banker, then the list of activities that at present being carried out by Merchant Banker under Buy-back Regulations are being reassigned to Company, Secretarial Auditor, Compliance Officer, Stock Exchanges and Statutory Auditors as under (the details of this placed at Annexure IV).

Sr. No	Responsibilities of MBs as per current regulatory framework	Activities proposed to be assigned to
1.	Appointment of Merchant Banker	NA
2.	Filing of letter of offer and Public Announcement along with Fees in accordance with the terms of the Regulations and ensuring that their contents are true, fair and adequate.	Company
3.	Certifying that the buy-back offer is complying with regulations and Due diligence certification	Secretarial Auditor
4.	Oversight and operation of escrow accounts including bank guarantees, cash deposits, approved securities, invocation rights and release of escrow account and forfeiture-related directions by SEBI.	Statutory Auditor
5.	Certification relating to adequacy of sell orders and VWAP of shares or other specified securities	Stock Exchanges
6.	Presence during extinguishment/destruction of securities in case of Tender offer	NA
7.	Presence during extinguishment/destruction of securities in case of buy-back through open market	Compliance officer
16.	Certification/verification of compliance with extinguishment of securities	Compliance officer
17.	Submission of final report	Company
10.	Ensuring availability of funds and firm financial arrangements for implementation of the buy-back	Company
11.	Compliance with relevant provisions of Companies Act, 2013	Company
12.	Disclosure of Public Announcement on website of Merchant Bankers	NA

10.3 Proposal:

10.3.1 In view of the above, it is proposed to make the appointment of Merchant Banker optional at the discretion of Company for undertaking buy-back of shares or other specified securities.

10.3.2 Further, in case Company decides not to appoint Merchant Banker, it is proposed to assign the activities which are presently carried out by the Merchant Banker to the Company, Stock Exchanges, Compliance Officer, Statutory Auditor and Secretarial Auditor.”

3. Addendum to Annexure III B:

3.1. Considering the modification proposed in the proposals mentioned at 10.3.1 and 10.3.2 of the Board Memorandum in this addendum, Annexure IIIB – Details of public comments, shall stand substituted by the revised Annexure IIIB enclosed here with the addendum.

4. Addendum to Annexure V:

4.1. Considering the modifications proposed in the proposals mentioned at 10.3.1 and 10.3.2 of the Board Memorandum in this addendum, Annexure V – Draft Amendments to SEBI (Buy-Back of Securities) Regulations, 2018, shall stand substituted by the revised Annexure V enclosed here with the addendum.

Enclosures:

1. Annexure IIIB – Details of public comments (Pages 1 to 18)

2. Annexure V – Draft Amendments to SEBI (Buy-Back of Securities) Regulations, 2018 (Pages 1 to 9)

Annexure I

Consultation Paper I is available on SEBI website at the following link:

https://www.sebi.gov.in/reports-and-statistics/reports/apr-2026/re-introduction-of-open-market-buy-back-of-shares-or-other-specified-securities-through-stock-exchange-100716.html

Annexure II

Consultation Paper II is available on SEBI website at the following link:

https://www.sebi.gov.in/reports-and-statistics/reports/may-2026/consultation-paper-on-review-and-rationalization-of-buy-back-of-securities-regulations-2018101337.html

Annexure IIIA