SEBI Tightens Buyback Framework, Introduces 15% Limit On Stock Exchange Route From 1 August

The Securities and Exchange Board of India (SEBI) on 1 July notified the SEBI (Buy-Back of Securities) (Amendment) Regulations, 2026, introducing changes to the framework governing share buybacks. The amendments will come into effect from 1 August 2026.

The amendments cap stock exchange buybacks at less than 15% of a company's paid-up capital and free reserves. SEBI has also restricted companies from making another buyback offer within the period prescribed under the Companies Act, 2013, from the closure of the previous buyback offer.

The revised regulations further provide that companies cannot undertake a buyback if it would result in a breach of the minimum public shareholding requirement.

SEBI has also modified the public announcement requirements for buyback offers. Companies must issue the public announcement within two working days of approving the buyback and electronically inform shareholders about an open market buyback offer within one working day thereafter.

Further, the new regulations provide that shares held by promoters and the promoter group will remain frozen at the International Securities Identification Number (ISIN) level during the buyback period, except in limited cases involving tender offer buybacks.

The revised framework also makes the appointment of a merchant banker optional for companies undertaking buybacks. Where a merchant banker is not appointed, the regulations assign compliance responsibilities to the company, secretarial auditor, statutory auditor, compliance officer and stock exchange.