The revised framework, cleared by the SEBI board, will come into effect from August 1, 2026, SEBI Chairperson Tuhin Kanta Pandey said at a press briefing. The move brings back a buyback structure that allows listed companies to repurchase their shares directly from the secondary market over a defined time period.
Under the open-market route, companies can buy back shares in tranches via stock exchanges, offering greater flexibility in timing and execution compared with tender offers. However, the mechanism had previously been discontinued amid concerns over inefficiencies in price discovery and limited assurance of equitable participation for all shareholders.
Currently, companies in India can execute buybacks through tender offers, where shareholders participate on a proportionate basis, or through other limited mechanisms such as odd-lot buybacks. The reintroduced framework is expected to expand the available capital allocation tools for corporates while also enhancing liquidity in the secondary market.
According to SEBI, the open-market buyback window will be capped at 60 days, setting a defined execution timeline for companies opting for the route. The regulator did not immediately provide additional details on pricing caps or operational safeguards under the revised structure.
Commenting on the reform, Makarand M Joshi, founder partner at MMJC and Associates, said the changes represent a significant shift in regulatory approach. “SEBI’s decision to allow two buybacks in a year aligns the regulations with the Companies Act Amendment Bill, 2026 and provides listed companies greater flexibility in capital management — critical when India Inc has already announced buybacks worth ₹25,000 crore in 2026 so far, the highest since 2023,” he noted.
He added that the reintroduction of open market buybacks and the discretion provided in appointing merchant bankers shifts greater responsibility onto companies and market intermediaries. “This would raise the bar on board-level and auditor accountability,” he said.
In its official press statement, SEBI said the appointment of a merchant banker has been made optional to reduce costs and improve ease of doing business. “If a company decides not to appoint a merchant banker, the activities typically handled by them will be assigned to the company, compliance officer, statutory auditor, secretarial auditor and stock exchanges,” the regulator stated.
Bir Bahadur Singh Sachar, Partner at JSA Advocates & Solicitors said, “Permitting open market buybacks represents a significant benefit for companies, as repurchases are executed at prevailing market prices rather than at a predetermined fixed price.” He added that this mechanism can be especially beneficial for companies whose current stock price does not fully reflect the underlying value of their business.
Pulkit Sukhramani, Partner at JSA Advocates & Solicitors said, “Companies seeking to consolidate ownership and enhance stock value may find the open market buyback route particularly advantageous.” He further added that buybacks conducted through stock exchanges reduce administrative burdens and provide greater flexibility regarding both timing and pricing.
