The Securities and Exchange Board of India (SEBI) approved the reintroduction of open-market share buybacks through stock exchanges [1].
This move allows companies with surplus cash to repurchase shares they believe are undervalued. By reducing the number of shares available on the market, companies can potentially increase shareholder value and improve overall market efficiency [2].
The new framework is scheduled to take effect Aug. 1, 2026 [3]. Under these guidelines, the timeline for completing an open-market buyback transaction is set at 66 days [4].
This mechanism provides a flexible alternative to tender offer buybacks. It enables firms to execute repurchases directly on the capital markets, which can lead to more fluid price discovery and a more streamlined process for returning capital to investors [1].
Some reports indicate the previous mechanism was phased out and discontinued in April 2025 [5]. The board's decision to revive the route reflects a shift toward enhancing investor protection while giving corporations more tools to manage their equity structures [2].
Market observers, including Mohandas Pai, said that companies should utilize surplus cash for such repurchases to benefit stakeholders [6]. The return of the stock-market route is expected to attract companies looking to stabilize their stock prices or signal confidence in their long-term growth prospects [1].
“SEBI approved the reintroduction of open-market share buybacks that can be executed through stock exchanges.”
The revival of open-market buybacks signals a regulatory effort to increase liquidity and flexibility in the Indian equity market. By allowing a 66-day window for execution, SEBI is balancing the need for corporate efficiency with the necessity of market stability. This shift may lead to increased volatility in the short term for companies announcing buybacks, but it generally provides a more efficient mechanism for companies to optimize their capital structure without the rigid requirements of a full tender offer.
