Sebi revives open market buybacks, new rules effective August 1; clears new code of conduct for members

Securities and Exchange Board of India chairman Tuhin Kanta Pandey on Friday said that Sebi is reintroducing open market buybacks through stock exchanges. Considering the revised taxation framework applicable for buybacks, the market regulator said this will come into effect from August 1, 2026.

Until now, buybacks could be undertaken through the tender offer route and the open market route through book-building.

One of the key features of the framework is that the reintroduced open market buybacks through stock exchanges must be completed within 66 working days from the opening of the offer. Additionally, at least 40% of the earmarked funds must be deployed during the first half of the buyback period, Sebi said. “The reintroduced open market buyback through stock exchanges shall be completed within 66 working days from the opening of buyback with at least 40% of funds earmarked shall be utilised during first half of buyback period.”

The open market buyback will be treated as a normal trading transaction. Therefore, requirement of a separate trading window and display of the company's identity as purchaser on the trading screen will be done away with.

Pandey also said that shares or other specified securities of the company for which the buyback is being undertaken, which is held by promoter(s) or his/their associates, shall remain frozen at international securities identification number (ISIN) level during the buyback period.

Bir Bahadur Singh Sachar – Partner, JSA Advocates & Solicitors says: “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. This mechanism can be especially beneficial for companies whose current stock price does not fully reflect the underlying value of their business.”

Easing transmission of securities to heirs

Sebi has introduced further reforms to streamline the transmission of securities to legal heirs and claimants of deceased investors. The regulator has introduced a new category of quick transmission processing (QTP) for small-value claims — up to ₹10,000 per scrip for physical holdings and up to ₹30,000 per scrip for dematerialised holdings — to facilitate faster processing with minimal documentation.

Limits for simplified documentation have also been doubled to ₹10 lakh from ₹5 lakh for physical holdings per listed company, and to ₹30 lakh from ₹15 lakh for demat holdings per beneficial owner, according to the regulator's press statement.

To further simplify the process, Sebi has removed the requirement for submitting PAN, noting that the information is already available while opening demat accounts. The regulator has also done away with the mandatory requirement of probate of a will, in line with recent amendments to succession laws.

Code of conduct for Sebi members

Highlighting one of the key governance decisions taken at the board meeting, Sebi chairman Tuhin Kanta Pandey said the regulator has approved a new code of conduct for Sebi members and amended the Sebi (Employees Service) Regulations. A high-level committee on conflict of interest, disclosures and related matters concerning Sebi members and officials will undertake a comprehensive review of the existing framework governing conflict of interest and disclosure norms for board members and employees.