{"id":7170,"date":"2026-07-27T16:27:52","date_gmt":"2026-07-27T10:57:52","guid":{"rendered":"https:\/\/lawsikho.com\/blog\/?p=7170"},"modified":"2026-07-27T16:27:55","modified_gmt":"2026-07-27T10:57:55","slug":"sebi-buy-back-of-securities-amendment-regulations-2026","status":"publish","type":"post","link":"https:\/\/lawsikho.com\/blog\/sebi-buy-back-of-securities-amendment-regulations-2026\/","title":{"rendered":"SEBI (Buy-Back of Securities) Amendment Regulations 2026"},"content":{"rendered":"\n<p>The SEBI (Buy-Back of Securities) Amendment Regulations 2026 were notified on 1 July 2026 and take effect on 1 August 2026. They restore the open-market buyback route through the stock exchange, which had been discontinued from 1 April 2025, alongside the existing tender-offer and book-building routes. The stock-exchange route is capped at less than 15% of paid-up capital plus free reserves, and a merchant banker is no longer mandatory. Where a company appoints none, the compliance duties the merchant banker used to carry move to the company and its officers.<\/p>\n<p>This article sets out what the SEBI (Buy-Back of Securities) Amendment Regulations 2026 change, who now carries the compliance load, and how a listed company should choose between the two routes.<\/p>\n<p>A leading Indian IT major concluded a buyback of roughly Rs 18,000 crore in December 2025, repurchasing shares through the tender route and extinguishing them. It had no real choice about the route: the stock-exchange (open-market) option had been shut since April 2025. That single fact explains why the 2026 amendment matters to any board thinking about returning surplus cash to shareholders.<\/p>\n<p>The reinstatement also lines up with a tax reset. Buyback proceeds moved from being taxed as a deemed dividend in shareholders&#8217; hands (from October 2024) to capital gains (from April 2026), which removed the distortion that had made open-market buybacks unattractive. So the route is back at the same moment the tax maths turned neutral again.<\/p>\n\n<hr>\n\n<nav class=\"ls-toc\" aria-label=\"Table of contents\">\n<h2>Table of Contents<\/h2>\n<ol class=\"ls-toc-list\">\n<li><a href=\"#h2-1\">The 2026 amendment restores the open-market buyback route<\/a>\n<\/li>\n<li><a href=\"#h2-2\">How does the restored stock-exchange buyback route work from 1 August 2026?<\/a>\n<\/li>\n<li><a href=\"#h2-3\">Is a merchant banker still required under the SEBI (Buy-Back of Securities) Amendment Regulations 2026?<\/a>\n<\/li>\n<li><a href=\"#h2-4\">Can promoters take part in an open-market buyback, and what limits still apply?<\/a>\n<\/li>\n<li><a href=\"#h2-5\">Why did SEBI bring back the open-market buyback route now?<\/a>\n<\/li>\n<li><a href=\"#h2-6\">Should a company choose the tender offer or the stock-exchange route?<\/a>\n<\/li>\n<li><a href=\"#h2-7\">What do the SEBI (Buy-Back of Securities) Amendment Regulations 2026 mean for companies, compliance officers and investors?<\/a>\n<\/li>\n<li><a href=\"#h2-8\">Frequently asked questions on the SEBI buyback amendment 2026<\/a>\n<\/li>\n<li><a href=\"#h2-9\">References<\/a>\n<\/li>\n<\/ol>\n<\/nav>\n\n<hr>\n\n<a id=\"h2-1\"><\/a><\/p>\n<h2>The 2026 amendment restores the open-market buyback route<\/h2>\n<p>The 2026 amendment reopens the stock-exchange (open-market) buyback route from 1 August 2026 and eases the requirement to appoint an intermediary. For close to five years the open-market option had been squeezed and then closed, leaving listed companies with only the tender offer and the book-building route. That is the headline: a repurchase mechanism that had disappeared is available again, and it comes with a lighter compliance structure than the one that existed before.<\/p>\n<p>Why does this matter to a company sitting on surplus cash? Because the route you can use decides the cost, the speed, and who has to sign off on the paperwork. A buyback that once needed a merchant banker, a fixed price, and a formal tender can now, within limits, be run directly on the exchange at market prices. The change is narrow in wording but wide in practical effect.<\/p>\n<p>The amendment operates on the existing framework rather than replacing it. It amends the <a href=\"https:\/\/www.sebi.gov.in\/legal\/regulations\/sep-2018\/securities-and-exchange-board-of-india-buy-back-of-securities-regulations-2018_40327.html\" target=\"_blank\" rel=\"noopener\">SEBI (Buy-Back of Securities) Regulations, 2018<\/a>, and it sits on top of the buyback provisions in the Companies Act, specifically <a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/2114\" target=\"_blank\" rel=\"noopener\">Section 68 of the Companies Act, 2013<\/a> to Section 70. For readers who want the underlying statutory scheme in one place, iPleaders has a useful primer on <a href=\"https:\/\/blog.ipleaders.in\/regulation-buyback-securities\/\" target=\"_blank\" rel=\"noopener\">the framework regulating buyback of securities in India<\/a>. The 2026 changes are best read as a course correction inside that scheme, not a fresh code.<\/p>\n<p>This reform also does not stand alone in SEBI&#8217;s 2026 agenda. It arrives in the same season as other capital-markets tweaks, including <a href=\"https:\/\/lawsikho.com\/blog\/sebi-icdr-amendment-2026-lock-in-abridged-rules\/\" target=\"_blank\" rel=\"noopener\">SEBI&#8217;s 2026 ICDR amendments on lock-in and disclosure<\/a>, which together signal a regulator trying to reduce friction for issuers while keeping investor protection intact. Seen that way, the buyback change is one piece of a broader easing.<\/p>\n<h3>When were the rules notified and when do they take effect?<\/h3>\n<p>The rules were notified on 1 July 2026 and take effect on 1 August 2026. The gap between notification and effect gives companies and their compliance teams a short runway to prepare, which matters because the responsibility structure has shifted (more on this below). Any buyback launched on or after 1 August 2026 falls under the amended framework.<\/p>\n<p>In practice, the notification date and the effective date do different work. The notification fixes the legal text; the effective date fixes when a company can actually rely on the restored route. The official notification is published on the regulator&#8217;s site at <a href=\"https:\/\/www.sebi.gov.in\/\" target=\"_blank\" rel=\"noopener\">sebi.gov.in<\/a>, and any board resolution should reference the notified text rather than press summaries.<\/p>\n<h3>Which regulations does the 2026 amendment amend?<\/h3>\n<p>The 2026 amendment amends the SEBI (Buy-Back of Securities) Regulations, 2018, which is the parent instrument for every listed-company buyback. It does not touch the Companies Act directly, but it operates within the outer limits that Section 68 and the sections that follow already set. Think of it as two layers: the Companies Act draws the boundary, and the SEBI regulations govern how a listed company moves within it.<\/p>\n<p>The amendment renumbers and inserts several sub-regulations to accommodate the restored route and the optional-intermediary regime. This article does not pin exact amended sub-regulation numbers, because the precise numbering should be read off the notified gazette rather than commentary. What is settled is the instrument being amended: the 2018 regulations, as amended in 2026.<\/p>\n<h3>The headline changes at a glance<\/h3>\n<p>The core changes can be captured in a short list. Each one is unpacked in the sections that follow, so treat this as the map rather than the territory.<\/p>\n<ul>\n<li>The open-market buyback route through the stock exchange is restored from 1 August 2026.<\/li>\n<li>The stock-exchange route is capped at less than 15% of paid-up capital plus free reserves.<\/li>\n<li>A merchant banker is no longer mandatory; appointing one becomes optional.<\/li>\n<li>Promoters remain barred from dealing in the company&#8217;s shares in that ISIN during the offer.<\/li>\n<li>A buyback cannot be run if it would push public shareholding below the minimum threshold.<\/li>\n<li>Successive buybacks must respect the one-year interval set by the Companies Act.<\/li>\n<\/ul>\n<p>Here is the pitfall to flag early. Do not assume the pre-2023 open-market mechanics survive unchanged. The route carries the same name it once had, but the cap, the timeline, and the responsibility structure are different now. And treating a 2024-era buyback memo as current is exactly how a compliance team walks into trouble.<\/p>\n<a id=\"h2-2\"><\/a>\n<h2>How does the restored stock-exchange buyback route work from 1 August 2026?<\/h2>\n<p>From 1 August 2026 a listed company can repurchase its own shares on the open market through the stock exchange, subject to a sub-15% cap and a fixed offer timeline. The mechanics sit between two poles: a tender offer, where the company invites shareholders to submit shares at a set price, and pure market trading, where the company simply buys through the exchange like any other participant. The restored route is the second kind, wrapped in disclosure and pacing rules.<\/p>\n<p>The situation that triggers this route is a company wanting to return cash quickly and at market-linked prices, without the machinery of a formal tender. A mid-cap board that has decided a modest repurchase is the right capital-return tool, rather than a special dividend, is the typical user. And for that board, the question is no longer &#8220;is the route open&#8221; but &#8220;what does running it actually involve&#8221;.<\/p>\n<h3>What is the size cap on the stock-exchange route?<\/h3>\n<p>The size cap on the stock-exchange route is less than 15% of the company&#8217;s paid-up capital plus free reserves, computed on both a standalone and a consolidated basis. This is the ceiling that separates the open-market route from the tender route: anything at or above that level has to be structured as a tender offer. The wording is &#8220;less than 15%&#8221; rather than a flat &#8220;up to 15%&#8221;, so the cap is a genuine sub-15% ceiling, not a round-number limit a company can touch.<\/p>\n<p>Why cap it at all? Because an uncapped open-market buyback lets a company move its own share price over an extended window, and the taper history (which we come to in the timeline) shows SEBI has long worried about exactly that. The cap keeps the open-market route to smaller, faster repurchases and pushes large capital returns toward the more tightly disclosed tender route.<\/p>\n<h3>How long can the offer run, and how fast must it open and close?<\/h3>\n<p>The offer has to open within four working days of the public announcement and close within 66 working days of opening. The public announcement itself must be filed within two working days of the board or special-resolution result, and at least 40% of the funds earmarked for the buyback must be deployed in the first half of the offer period. The amendment keeps the compressed timeline that the 2023 changes had introduced, rather than reverting to the older six-month window.<\/p>\n<p>The point of a tight window is discipline. A buyback that drifts across half a year gives the market a long period of uncertainty about the company&#8217;s own trading intentions, and it lets the buyer manage the price for longer. A shorter window forces the company to complete its repurchase and get out, which is better for ordinary shareholders trying to read the tape.<\/p>\n<h3>How is the buyback price set on the open market?<\/h3>\n<p>On the open market the buyback price is not fixed in advance; the company buys at prevailing market prices up to a stated maximum. This is the sharpest contrast with a tender offer, where a single fixed price (often at a premium) is announced and every accepted shareholder gets the same amount. The open-market route trades that certainty for flexibility.<\/p>\n<p>The difference between the two open-market variants is worth pinning down. In the book-building variant, the price is discovered through a bidding process within a band; in the stock-exchange variant, the company simply executes purchases on the exchange up to its ceiling price and its value cap. So the question &#8220;book-building versus stock-exchange route&#8221; comes down to whether price is discovered through bids or set by live market execution. Both are open-market methods; only one runs as ordinary exchange trades.<\/p>\n<h3>Methods of buyback now available<\/h3>\n<p>Three methods of buyback are available to a listed company from 1 August 2026. Listing them cleanly matters because the choice of method drives almost everything else, from pricing to promoter participation.<\/p>\n<ul>\n<li>Tender offer: the company invites all eligible shareholders to tender shares at a fixed price, usually at a premium, on a proportionate basis.<\/li>\n<li>Open-market buyback via book-building: price is discovered through a bidding process within an announced band.<\/li>\n<li>Open-market buyback via the stock exchange: the company buys on the exchange at market prices up to a ceiling, restored from 1 August 2026.<\/li>\n<\/ul>\n<h3>What escrow, disclosure and shareholder-intimation steps apply?<\/h3>\n<p>The route still runs on escrow, public disclosure, direct shareholder intimation, and the resolutions the Companies Act requires. A company must make a public announcement, back the offer with an escrow arrangement, and keep the market informed of daily progress once buying starts. None of that disappeared when the merchant banker became optional; if anything, the company now owns those steps more directly.<\/p>\n<p>The resolution requirement flows from the statute. A buyback up to the board-approved threshold can go through on a board resolution, while a larger buyback needs a special resolution of shareholders under <a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/2114\" target=\"_blank\" rel=\"noopener\">Section 68 of the Companies Act, 2013<\/a>. The escrow must be maintained in the forms the regulations specify (cash, a bank guarantee, government securities, gilt or overnight mutual-fund units, or a combination) and is subject to the margin requirements SEBI sets; under the 2026 amendment the operation and oversight of that escrow shifts to the company&#8217;s statutory auditor and the stock exchanges rather than a merchant banker. What holds across every buyback is the shape: announce, fund the escrow, intimate shareholders, execute, disclose, and file the post-buyback return.<\/p>\n<h3>A compliance checklist for running a stock-exchange-route buyback<\/h3>\n<p>For a compliance team running the stock-exchange route, the sequence is stable and worth setting out step by step. Here is a working checklist.<\/p>\n<ol>\n<li>Confirm the buyback fits within the less-than-15% open-market cap and within the Section 68 outer limit.<\/li>\n<li>Pass the board or special resolution, depending on size.<\/li>\n<li>File the required declarations and set up the escrow account before the public announcement.<\/li>\n<li>Make the public announcement and open the offer within the permitted window.<\/li>\n<li>Execute purchases on the exchange within the ceiling price and the value cap.<\/li>\n<li>Disclose daily buyback progress to the exchanges through the offer period.<\/li>\n<li>Extinguish the bought-back shares and file the post-buyback return within the statutory time.<\/li>\n<\/ol>\n<p>A common question compliance teams raise is whether the 66-working-day figure means the buyback must run that long. It does not: 66 working days is an outer limit, not a minimum, and a company that hits its value target early can close sooner (we cover this in the FAQ). The pitfall here is missing the utilisation thresholds. A stock-exchange buyback that fails to deploy the required minimum of its announced amount can attract regulatory questions, so pacing is not just administrative housekeeping.<\/p>\n\n<p>\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"ls-ig-checklist\" style=\"margin:2rem 0;max-width:800px;\">\n<style>\n.ls-ig-checklist, .ls-ig-checklist *, .ls-ig-checklist *::before, .ls-ig-checklist *::after { box-sizing: border-box; margin: 0; padding: 0; }\n.ls-ig-checklist { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; line-height: 1.5; background: #ffffff; border-radius: 10px; overflow: hidden; box-shadow: 0 2px 10px rgba(0,0,0,0.08); border: 1px solid #e0e0e0; }\n.ls-ig-checklist .ig-head { background: #1a237e; color: #ffffff; padding: 20px 24px; }\n.ls-ig-checklist .ig-head .igh1 { font-size: 20px; line-height: 1.25; font-weight: 700; }\n.ls-ig-checklist .ig-head p { font-size: 13px; margin-top: 7px; color: #c5cae9; }\n.ls-ig-checklist .ig-body { padding: 8px 16px 4px; }\n.ls-ig-checklist .item { display: flex; align-items: flex-start; gap: 12px; padding: 13px 10px; border-radius: 6px; }\n.ls-ig-checklist .item:nth-child(odd) { background: #f5f5f5; }\n.ls-ig-checklist .tick { flex: 0 0 26px; width: 26px; height: 26px; border-radius: 5px; background: #ff6f00; color: #ffffff; font-size: 13px; font-weight: 700; line-height: 26px; text-align: center; margin-top: 1px; }\n.ls-ig-checklist .item-text { font-size: 15px; color: #212121; }\n.ls-ig-checklist .item-text strong { color: #1a237e; }\n.ls-ig-checklist .ig-foot { display: flex; justify-content: space-between; align-items: center; flex-wrap: wrap; gap: 8px; padding: 14px 24px 18px; border-top: 2px solid #f5f5f5; }\n.ls-ig-checklist .ig-foot .count { font-size: 13px; color: #616161; }\n.ls-ig-checklist .ig-foot .count b { color: #ff6f00; font-size: 15px; }\n.ls-ig-checklist .brand { font-size: 15px; font-weight: 700; color: #1a237e; letter-spacing: 0.2px; }\n.ls-ig-checklist .ig-note { font-size: 12px; color: #757575; padding: 0 24px 16px; }\n@media (max-width: 480px) { .ls-ig-checklist .ig-head .igh1 { font-size: 18px; } .ls-ig-checklist .item-text { font-size: 14px; } }\n<\/style>\n<div role=\"figure\" aria-label=\"Compliance checklist for running a stock-exchange-route buyback under the SEBI 2026 amendment\">\n  <div class=\"ig-head\">\n    <div class=\"igh1\">Compliance checklist: a stock-exchange-route buyback<\/div>\n    <p>The sequence a company follows under the SEBI (Buy-Back of Securities) Amendment Regulations, 2026<\/p>\n  <\/div>\n  <div class=\"ig-body\">\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\">Confirm the buyback fits <strong>less than 15%<\/strong> of paid-up capital plus free reserves, and within the Section 68 outer limit.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\">Pass the <strong>board or special resolution<\/strong>, depending on the size of the buyback.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\">Set up the <strong>escrow account<\/strong> in the permitted forms (cash, bank guarantee, government securities or gilt \/ overnight mutual-fund units) before the public announcement.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\">File the <strong>public announcement within 2 working days<\/strong> of the resolution result.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\"><strong>Open the offer within 4 working days<\/strong> of the public announcement.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\">Deploy <strong>at least 40%<\/strong> of the earmarked funds in the first half of the offer period.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\">Execute purchases on the exchange within the ceiling price and the value cap, and <strong>disclose daily progress<\/strong> to the exchanges.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\"><strong>Close the offer within 66 working days<\/strong> of opening.<\/span><\/div>\n    <div class=\"item\"><span class=\"tick\">&#10003;<\/span><span class=\"item-text\"><strong>Extinguish<\/strong> the bought-back shares and <strong>file the post-buyback return<\/strong> within the statutory time.<\/span><\/div>\n  <\/div>\n  <div class=\"ig-foot\">\n    <span class=\"count\"><b>9<\/b> steps, in sequence<\/span>\n    <span class=\"brand\">LawSikho<\/span>\n  <\/div>\n  <div class=\"ig-note\">Source: SEBI (Buy-Back of Securities) Regulations, 2018 and 2026 Amendment; Companies Act, 2013 s.68. No fixed escrow percentage is prescribed.<\/div>\n<\/div>\n<\/div>\n<\/figure>\n\n<a id=\"h2-3\"><\/a><\/p>\n<h2>Is a merchant banker still required under the SEBI (Buy-Back of Securities) Amendment Regulations 2026?<\/h2>\n<p>A merchant banker is no longer mandatory for a buyback under the SEBI (Buy-Back of Securities) Amendment Regulations 2026, and where a company appoints none, the duties the merchant banker used to discharge move to the company and its officers. This is the change with the longest tail. On paper it reads as deregulation; in practice it reallocates work and liability rather than deleting them.<\/p>\n<p>SEBI&#8217;s stated reason is ease of doing business. A small buyback that had to carry the cost of a mandatory intermediary was expensive relative to the amount returned, and for the smallest issuers that cost could swallow the point of the exercise. Making the intermediary optional lowers the entry cost, which is the same instinct behind the restored route itself.<\/p>\n<h3>Who takes over each merchant-banker duty when none is appointed?<\/h3>\n<p>When no merchant banker is appointed, each duty it used to perform lands on a specific internal owner. The certifications, the escrow oversight, the public-announcement filings, and the compliance confirmations do not vanish; they are redistributed across the company, its compliance officer, its statutory auditor, its secretarial auditor, and the stock exchanges. Broadly, the company takes on the letter of offer, the public announcement, the confirmation of fund availability and the final report; the secretarial auditor takes over the compliance certification and due-diligence sign-off the merchant banker used to give; the statutory auditor takes on operating and overseeing the escrow account; the compliance officer must be present at the extinguishment of shares and verify the certifications; and the stock exchanges handle the adequacy of sell orders and the volume-weighted-average-price certification. The responsibility matrix below (rendered as an infographic in this section) maps each former merchant-banker duty to its new owner.<\/p>\n<p>These duties are framed from the amendment rather than by quoting an exact sub-regulation number, which should be read off the notified gazette. The direction of travel is clear: verification and certification work that a SEBI-registered intermediary once signed now needs an internal or professional signatory inside the company&#8217;s own ecosystem. That is a structural shift, not a paperwork tidy-up.<\/p>\n<h3>Does making the merchant banker optional actually cut the compliance burden or just move it?<\/h3>\n<p>Making the merchant banker optional cuts the external fee, but it moves most of the compliance burden inward rather than removing it. A company that skips the intermediary saves the mandate cost and keeps control of timing, which is the upside. The trade is that the company&#8217;s own officers now carry the certification and monitoring load, and they carry the liability that comes with it.<\/p>\n<p>So is the &#8220;without a merchant banker&#8221; option always cheaper? Not once you price in risk. For a company with a thin compliance function, the merchant banker&#8217;s fee can be cheaper than building the in-house capability and absorbing the exposure, while a company with a strong secretarial team may genuinely save. The better approach, in our view, is to treat the choice as a build-versus-buy decision on compliance capacity, not as a free saving.<\/p>\n<h3>What new liabilities does a company secretary or compliance officer take on?<\/h3>\n<p>A company secretary or compliance officer running a buyback without a merchant banker takes on direct responsibility for the accuracy of the declarations, the integrity of the disclosures, and the conduct of the offer. Where an intermediary once stood between the company and the regulator on these confirmations, the officer now signs closer to the front line. That is a meaningful expansion of personal exposure for the people who hold those roles.<\/p>\n<p>This is also why board oversight matters more than it did. It helps to understand <a href=\"https:\/\/lawsikho.com\/blog\/role-of-independent-directors-in-listed-company-governance-sebi-lodr-framework\/\" target=\"_blank\" rel=\"noopener\">how independent directors oversee listed-company governance<\/a>, because the audit committee and the independent directors become the internal check that the merchant banker&#8217;s external review used to provide. The compliance officer executes; the board is expected to supervise. Both parts have to work for the optional-intermediary model to be safe.<\/p>\n\n<h3>Does optional oversight raise governance risk?<\/h3>\n<p>Optional oversight does raise governance risk, because the intermediary review that once caught disclosure problems is now something a company has to reproduce internally or not at all. The clearest cautionary illustration comes from an earlier open-market buyback matter involving a Vedanta-group company. SEBI&#8217;s adjudicating officer had found a 2014 open-market buyback announcement misleading and imposed penalties, but on appeal the Securities Appellate Tribunal set that order aside in <a href=\"https:\/\/indiankanoon.org\/doc\/56819153\/\" target=\"_blank\" rel=\"noopener\">Vedanta Ltd. v. SEBI, Appeal No. 420 of 2021 (SAT, order dated 5 October 2023)<\/a>, holding that the announcement was not misleading and that the company&#8217;s failure to complete the buyback at the announced scale flowed from market conditions (the share price staying above the maximum buyback price on most trading days) rather than from any fraudulent intent.<\/p>\n<p>The point for a 2026 reader does not depend on which side won. What the episode shows is that SEBI actively scrutinises open-market buyback announcements for genuineness of intent, and that such a dispute can run for the better part of a decade before it is resolved. When intermediary oversight of an open-market announcement is optional, that scrutiny does not go away, so boards should assume SEBI will watch open-market buyback announcements closely even where the company is ultimately vindicated. A common worry among company-secretary teams is whether this &#8220;optional&#8221; regime is a trap: the better read is that it is not a trap, but it is a test of whether the company&#8217;s own governance can do the job the intermediary used to do.<\/p>\n<p>The pitfall to avoid is the assumption that optional means lighter. It means self-owned, which for a well-run board is manageable and for a weak one is dangerous.<\/p>\n<p>\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"ls-ig-responsibility\" style=\"margin:2rem 0;max-width:800px;\">\n<style>\n.ls-ig-responsibility, .ls-ig-responsibility *, .ls-ig-responsibility *::before, .ls-ig-responsibility *::after { box-sizing: border-box; margin: 0; padding: 0; }\n.ls-ig-responsibility { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; line-height: 1.5; background: #ffffff; border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; box-shadow: 0 2px 6px rgba(0,0,0,0.05); }\n.ls-ig-responsibility .ig-title { background: #1a237e; color: #ffffff; padding: 18px 24px; font-size: 19px; font-weight: 700; text-align: center; }\n.ls-ig-responsibility .ig-title small { display: block; font-size: 13px; font-weight: 400; opacity: 0.85; margin-top: 5px; }\n.ls-ig-responsibility .ig-headers { display: grid; 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justify-content: space-between; align-items: center; flex-wrap: wrap; gap: 8px; padding: 14px 24px; background: #1a237e; color: #ffffff; font-size: 12px; }\n.ls-ig-responsibility .ig-foot .src { opacity: 0.85; max-width: 620px; }\n.ls-ig-responsibility .ig-foot .brand { font-weight: 700; letter-spacing: 0.5px; }\n@media (max-width: 600px) {\n  .ls-ig-responsibility .ig-headers, .ls-ig-responsibility .ig-row { grid-template-columns: 1fr; }\n  .ls-ig-responsibility .ig-cell, .ls-ig-responsibility .ig-headers > div { border-right: none; border-bottom: 1px solid #e0e0e0; }\n  .ls-ig-responsibility .ig-cell:last-child, .ls-ig-responsibility .ig-headers > div:last-child { border-bottom: none; }\n  .ls-ig-responsibility .ig-duty { background: #1a237e; color: #ffffff; }\n  .ls-ig-responsibility .ig-owner::before { content: \"New owner: \"; font-weight: 700; color: #ff6f00; }\n  .ls-ig-responsibility .ig-note::before { content: \"Note: \"; font-weight: 700; color: #616161; }\n  .ls-ig-responsibility .ig-title { font-size: 17px; }\n}\n<\/style>\n<div role=\"figure\" aria-label=\"Responsibility matrix showing who takes over each former merchant-banker duty when no merchant banker is appointed for a buyback\">\n  <div class=\"ig-title\">Who is responsible now<small>The merchant-banker responsibility matrix when no merchant banker is appointed<\/small><\/div>\n  <div class=\"ig-headers\">\n    <div>Former merchant-banker duty<\/div>\n    <div>New owner<\/div>\n    <div>What it means<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-duty\">Certifications and compliance confirmations on the offer<\/div>\n    <div class=\"ig-cell ig-owner\">Company and compliance officer<\/div>\n    <div class=\"ig-cell ig-note\">Signed closer to the front line; personal exposure rises.<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-duty\">Public-announcement and offer-document filings<\/div>\n    <div class=\"ig-cell ig-owner\">Company \/ compliance officer<\/div>\n    <div class=\"ig-cell ig-note\">The company owns the filing directly.<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-duty\">Escrow arrangement oversight<\/div>\n    <div class=\"ig-cell ig-owner\">Statutory auditor (with stock exchange)<\/div>\n    <div class=\"ig-cell ig-note\">Escrow itself remains mandatory.<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-duty\">Verification of eligibility and limits (Section 68 and SEBI caps)<\/div>\n    <div class=\"ig-cell ig-owner\">Statutory auditor<\/div>\n    <div class=\"ig-cell ig-note\">An independent professional check on the numbers.<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-duty\">Secretarial and process compliance<\/div>\n    <div class=\"ig-cell ig-owner\">Secretarial auditor<\/div>\n    <div class=\"ig-cell ig-note\">Confirms adherence to the regulations and the Companies Act.<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-duty\">Trade-execution monitoring and daily disclosure<\/div>\n    <div class=\"ig-cell ig-owner\">Company and stock exchange<\/div>\n    <div class=\"ig-cell ig-note\">The exchange remains the venue and the monitoring layer.<\/div>\n  <\/div>\n  <div class=\"ig-foot\">\n    <span class=\"src\">Duties redistribute; they do not disappear. Source: SEBI (Buy-Back of Securities) Amendment Regulations, 2026 as reported by Cyril Amarchand, Taxguru and Argus.<\/span>\n    <span class=\"brand\">LawSikho<\/span>\n  <\/div>\n<\/div>\n<\/div>\n<\/figure>\n\n<a id=\"h2-4\"><\/a><\/p>\n<h2>Can promoters take part in an open-market buyback, and what limits still apply?<\/h2>\n<p>Promoters cannot buy or sell the company&#8217;s shares through the open-market route during the buyback, and several structural limits continue to bind the offer. The open-market route is, by design, a mechanism for the company to buy from the ordinary market, not a channel for insiders to trade around the event. So the promoter restriction is not an afterthought; it is part of what keeps the route clean.<\/p>\n<p>So what exactly is the regulation guarding against here? A promoter who could trade the same shares while the company was buying in the open market would sit on both sides of a price the company itself is influencing. And that is precisely the conflict the freeze removes. The regulations close that door, and they layer several other limits on top.<\/p>\n<h3>What is the ISIN-level promoter freeze during a buyback?<\/h3>\n<p>The ISIN-level promoter freeze bars promoters and the promoter group from dealing in the company&#8217;s shares in that ISIN for the duration of the open-market offer. An ISIN is the unique identifier for a company&#8217;s equity, so freezing activity at the ISIN level is a precise way of saying &#8220;no promoter trading in these shares while the buyback is live&#8221;. The freeze runs through the offer window and is one of the conditions the company must confirm it has observed.<\/p>\n<p>This article does not tie the freeze to a specific amended sub-regulation number, but the substance is well established from the earlier open-market regime and is retained under the 2026 amendment. In practice, the freeze also answers the &#8220;separate trading window&#8221; question: the offer period functions as a closed window for the promoter side, and the company&#8217;s own buying is the only permitted activity in that ISIN from the insider camp.<\/p>\n<h3>The minimum public shareholding bar and the 25% float<\/h3>\n<p>A buyback cannot be run if it would push public shareholding below the mandatory minimum, and for most listed companies that floor is a 25% public float. Because a buyback extinguishes shares, it can mechanically raise the promoter percentage and shrink the public share, which is exactly the outcome the minimum public shareholding (MPS) rule prevents. The limit binds at the level of the resulting shareholding pattern, not just the size of the buyback.<\/p>\n<p>This is where sequencing matters. A company whose public float already sits close to 25% has very little room, because even a modest buyback can tip it below the line if promoter holding is high. The practical answer is to model the post-buyback shareholding pattern before announcing, not after. Getting this wrong mid-offer is one of the costlier mistakes, since a breach of the float is a listing-condition problem, not a mere buyback technicality.<\/p>\n<h3>Can a company run successive buybacks, and what gap is required?<\/h3>\n<p>A company cannot launch buybacks back to back; a minimum interval of one year applies, set by the Companies Act. Under Section 68(2)(g) of the Companies Act, 2013, no fresh buyback offer can be made within one year (twelve months) reckoned from the closure of the preceding buyback offer, whether the earlier offer was approved by the board or by shareholders. That stops a company from using serial buybacks to manage its share price or capital structure on a rolling basis. The interval is a statutory brake, and the 2026 amendment expressly ties the SEBI-route interval to the period the Companies Act prescribes rather than setting a separate SEBI clock.<\/p>\n<p>So the concept of a mandatory cooling-off between buybacks not only survives, it is now read straight off the Companies Act. A compliance team should date the one-year clock from the closure of the last offer, not from its announcement or its board approval.<\/p>\n<h3>How do the Companies Act limits and the SEBI limits interact?<\/h3>\n<p>The Companies Act limits set the outer boundary, and the SEBI limits operate inside it. Under <a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/2114\" target=\"_blank\" rel=\"noopener\">Section 68 of the Companies Act, 2013<\/a>, a buyback cannot exceed 25% of the aggregate of paid-up capital and free reserves in a financial year, and the post-buyback debt-equity ratio must stay within the statutory limit. The SEBI regulations then carve the open-market route down to less than 15% of paid-up capital plus free reserves, which is a tighter cap that lives inside the Section 68 ceiling.<\/p>\n<p>So the two do not compete; they stack. A company first checks that it is within the Section 68 aggregate and the debt-equity test, then checks that the chosen route respects the SEBI cap for that method. A buyback that also shifts promoter and public holding can brush against takeover thresholds, so it is worth understanding <a href=\"https:\/\/lawsikho.com\/blog\/sebi-takeover-code-2025-amendment-2\/\" target=\"_blank\" rel=\"noopener\">how the SEBI takeover code and its open-offer triggers interact with a buyback<\/a> before finalising the size. The pitfall practitioners flag most is checking only one layer: passing the Section 68 test and forgetting that the open-market route has a lower SEBI cap of its own.<\/p>\n<a id=\"h2-5\"><\/a>\n<h2>Why did SEBI bring back the open-market buyback route now?<\/h2>\n<p>SEBI reopened the route because the tax change that had made open-market buybacks unattractive was reversed, restoring parity between a buyback and an ordinary market sale. For a stretch, the tax treatment penalised buyback proceeds relative to simply selling in the market, which drained the logic out of the open-market route. Once that penalty went, the case for keeping the route shut weakened, and SEBI moved to bring it back.<\/p>\n<p>To see why the timing is not a coincidence, it helps to lay the regulatory and tax milestones on a single line. The glide-path below (rendered as a timeline infographic in this section) does that.<\/p>\n<h3>The glide-path from 2013 to 2025<\/h3>\n<p>The open-market route did not vanish overnight; it was tapered out across roughly a decade. The chronology runs from statutory codification through a steady tightening to full discontinuation.<\/p>\n<ul>\n<li>2013: the Companies Act, 2013 codified the buyback limits and conditions in Section 68 to Section 70, including the 25% aggregate cap and the debt-equity test.<\/li>\n<li>2018: the SEBI (Buy-Back of Securities) Regulations, 2018 consolidated the framework into the tender, book-building, stock-exchange, and odd-lot methods.<\/li>\n<li>February 2023: the odd-lot route was withdrawn and the open-market stock-exchange route was put on a taper, understood to move from 15% to 10% to 5% across successive years, with the offer window compressed.<\/li>\n<li>1 April 2025: the stock-exchange (open-market) route was fully discontinued, leaving only the tender offer and book-building.<\/li>\n<\/ul>\n<h3>How does the tax timeline explain the reversal?<\/h3>\n<p>The tax timeline is the missing half of the story, and overlaying it on the glide-path is what makes the reversal make sense. From 1 October 2024, under the Finance (No.2) Act, 2024, the company-level buyback tax under Section 115QA of the Income-tax Act, 1961 was removed and proceeds were instead taxed as a deemed dividend in the shareholder&#8217;s hands under Section 2(22)(f) of that Act, with no deduction for the cost of acquisition. That was punishing, because a shareholder was taxed on the whole receipt rather than on a gain.<\/p>\n<p>From 1 April 2026, the treatment shifted again: buyback proceeds are taxed as capital gains, with the cost of acquisition deductible, under the Income-tax Act, 2025 as amended by the Finance Act, 2026. That restored parity with a normal market sale, where a seller is taxed only on the gain. So the honest answer to &#8220;do capital gains help me&#8221; is yes for most shareholders with a real cost base, because being taxed on the gain beats being taxed on the gross receipt.<\/p>\n<h3>Why discontinue the route in the first place?<\/h3>\n<p>SEBI discontinued the open-market route because it was seen as prone to misuse and price distortion, and the tax regime of the time had already dulled its appeal. An open-market buyback running over months gives a large buyer a long hand on its own share price, and the regulator had flagged that concern through the taper years. Combined with a tax treatment that made buybacks costly for shareholders, the route was doing little useful work, so shutting it was a low-cost decision at the time.<\/p>\n<p>What changed is that both halves of that logic reversed. The tax penalty went, and SEBI addressed the distortion worry through the sub-15% cap and the compressed timeline rather than an outright ban. That is a more proportionate design: keep the route, but keep it small and fast.<\/p>\n<h3>What happens next for buyback activity?<\/h3>\n<p>Early signals suggest more frequent, smaller open-market buybacks, especially from mid-cap and small-cap issuers, now that the route is cheaper and tax-neutral. Practitioners expect a volume pickup once companies digest the optional-intermediary regime, and follow-on SEBI circulars are likely to operationalise the redistributed duties in more detail. The direction is toward buybacks becoming a more routine capital-return tool rather than a once-in-a-cycle event.<\/p>\n<p>There is a second-order effect worth naming. As small buybacks stop needing a mandatory intermediary, advisory fees on those deals compress, and merchant bankers are likely to reposition toward large tender-route mandates and structuring work. The demand does not disappear; it migrates up the deal-size curve. And for in-house compliance teams, the same shift turns buyback capability into billable internal work.<\/p>\n<p>\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"ls-ig-timeline\" style=\"margin:2rem 0;max-width:800px;\">\n<style>\n.ls-ig-timeline, .ls-ig-timeline *, .ls-ig-timeline *::before, .ls-ig-timeline *::after { box-sizing: border-box; margin: 0; padding: 0; }\n.ls-ig-timeline { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; line-height: 1.5; background: #ffffff; border: 1px solid #e0e0e0; border-radius: 10px; overflow: hidden; box-shadow: 0 2px 8px rgba(0,0,0,0.06); }\n.ls-ig-timeline .ig-title { background: #1a237e; color: #ffffff; padding: 18px 24px; font-size: 19px; font-weight: 700; text-align: center; }\n.ls-ig-timeline .ig-title small { display: block; font-size: 13px; font-weight: 400; opacity: 0.85; margin-top: 5px; }\n.ls-ig-timeline .ig-legend { display: flex; gap: 20px; justify-content: center; flex-wrap: wrap; padding: 12px 20px; background: #eef0f8; font-size: 12px; color: #37406b; }\n.ls-ig-timeline .ig-legend span { display: inline-flex; align-items: center; gap: 6px; font-weight: 600; }\n.ls-ig-timeline .ig-legend .swatch { width: 12px; height: 12px; border-radius: 50%; }\n.ls-ig-timeline .ig-legend .swatch.reg { background: #1a237e; }\n.ls-ig-timeline .ig-legend .swatch.tax { background: #ff6f00; }\n.ls-ig-timeline .ig-track { padding: 22px 22px 24px; }\n.ls-ig-timeline .ig-step { position: relative; padding: 0 0 22px 34px; border-left: 3px solid #c5cae9; }\n.ls-ig-timeline .ig-step:last-child { border-left: 3px solid transparent; padding-bottom: 0; }\n.ls-ig-timeline .ig-dot { position: absolute; left: -11px; top: 2px; width: 20px; height: 20px; border-radius: 50%; background: #1a237e; border: 3px solid #ffffff; box-shadow: 0 0 0 2px #1a237e; }\n.ls-ig-timeline .ig-step.tax .ig-dot { background: #ff6f00; box-shadow: 0 0 0 2px #ff6f00; }\n.ls-ig-timeline .ig-step.key .ig-dot { width: 24px; height: 24px; left: -13px; background: #1a237e; box-shadow: 0 0 0 2px #1a237e, 0 0 0 6px rgba(26,35,126,0.15); }\n.ls-ig-timeline .ig-date { font-size: 13px; font-weight: 700; color: #1a237e; letter-spacing: 0.3px; }\n.ls-ig-timeline .ig-step.tax .ig-date { color: #ff6f00; }\n.ls-ig-timeline .ig-tag { display: inline-block; font-size: 10px; font-weight: 800; text-transform: uppercase; letter-spacing: 0.5px; color: #ffffff; background: #ff6f00; border-radius: 4px; padding: 1px 7px; margin-left: 8px; vertical-align: middle; }\n.ls-ig-timeline .ig-tag.reg { background: #1a237e; }\n.ls-ig-timeline .ig-hd { font-size: 15px; font-weight: 700; margin: 3px 0 3px; color: #212121; }\n.ls-ig-timeline .ig-dc { font-size: 14px; color: #424242; }\n.ls-ig-timeline .ig-foot { display: flex; justify-content: space-between; align-items: center; flex-wrap: wrap; gap: 8px; background: #1a237e; color: #ffffff; padding: 14px 24px; font-size: 12px; }\n.ls-ig-timeline .ig-foot .src { opacity: 0.85; max-width: 640px; }\n.ls-ig-timeline .ig-foot .brand { font-weight: 700; letter-spacing: 0.5px; }\n@media (max-width: 480px) { .ls-ig-timeline .ig-title { font-size: 17px; } .ls-ig-timeline .ig-dc { font-size: 14px; } }\n<\/style>\n<div role=\"figure\" aria-label=\"Timeline of the buyback stock-exchange route and its tax treatment from 2013 to 2026\">\n  <div class=\"ig-title\">The buyback glide-path and tax timeline<small>How the stock-exchange route and its tax treatment moved together, 2013 to 2026<\/small><\/div>\n  <div class=\"ig-legend\">\n    <span><span class=\"swatch reg\"><\/span>Regulatory track<\/span>\n    <span><span class=\"swatch tax\"><\/span>Tax treatment<\/span>\n  <\/div>\n  <div class=\"ig-track\">\n    <div class=\"ig-step\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">2013<span class=\"ig-tag reg\">Regulatory<\/span><\/div>\n      <div class=\"ig-hd\">Companies Act, 2013 codifies buyback limits<\/div>\n      <div class=\"ig-dc\">Sections 68 to 70 set the aggregate cap (25% of paid-up capital plus free reserves) and the debt-equity test that still frames every buyback.<\/div>\n    <\/div>\n    <div class=\"ig-step\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">2018<span class=\"ig-tag reg\">Regulatory<\/span><\/div>\n      <div class=\"ig-hd\">SEBI (Buy-Back of Securities) Regulations, 2018<\/div>\n      <div class=\"ig-dc\">The 2018 regulations consolidate the tender-offer, book-building, stock-exchange (open-market) and odd-lot methods into a single framework.<\/div>\n    <\/div>\n    <div class=\"ig-step\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">February 2023<span class=\"ig-tag reg\">Regulatory<\/span><\/div>\n      <div class=\"ig-hd\">Open-market route put on a taper<\/div>\n      <div class=\"ig-dc\">The odd-lot route is withdrawn and the stock-exchange route is tapered 15% to 10% to 5%, with the offer window compressed.<\/div>\n    <\/div>\n    <div class=\"ig-step tax\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">1 October 2024<span class=\"ig-tag\">Tax<\/span><\/div>\n      <div class=\"ig-hd\">Company-level buyback tax removed<\/div>\n      <div class=\"ig-dc\">Section 115QA is abolished; buyback proceeds are taxed as a deemed dividend in the shareholder&#8217;s hands, with no cost of acquisition deductible (Finance (No.2) Act, 2024).<\/div>\n    <\/div>\n    <div class=\"ig-step\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">1 April 2025<span class=\"ig-tag reg\">Regulatory<\/span><\/div>\n      <div class=\"ig-hd\">Stock-exchange route fully discontinued<\/div>\n      <div class=\"ig-dc\">The open-market route is closed off completely; only the tender-offer and book-building methods remain available.<\/div>\n    <\/div>\n    <div class=\"ig-step tax\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">1 April 2026<span class=\"ig-tag\">Tax<\/span><\/div>\n      <div class=\"ig-hd\">Capital-gains treatment restored<\/div>\n      <div class=\"ig-dc\">Buyback proceeds are taxed as capital gains, with cost of acquisition deductible; parity with an ordinary market sale returns.<\/div>\n    <\/div>\n    <div class=\"ig-step\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">1 July 2026<span class=\"ig-tag reg\">Regulatory<\/span><\/div>\n      <div class=\"ig-hd\">2026 Amendment notified<\/div>\n      <div class=\"ig-dc\">The SEBI (Buy-Back of Securities) Amendment Regulations, 2026 are notified in the gazette.<\/div>\n    <\/div>\n    <div class=\"ig-step key\">\n      <span class=\"ig-dot\"><\/span>\n      <div class=\"ig-date\">1 August 2026<span class=\"ig-tag reg\">Regulatory<\/span><\/div>\n      <div class=\"ig-hd\">Amendment takes effect: route restored<\/div>\n      <div class=\"ig-dc\">The stock-exchange route returns for buybacks of less than 15% of paid-up capital plus free reserves, and the merchant banker becomes optional.<\/div>\n    <\/div>\n  <\/div>\n  <div class=\"ig-foot\">\n    <span class=\"src\">The route returns at almost the same moment the tax treatment turns neutral again. Sources: Companies Act, 2013; SEBI (Buy-Back of Securities) Regulations, 2018 and 2026 Amendment; Finance (No.2) Act, 2024; Income-tax Act, 2025 as amended by Finance Act, 2026.<\/span>\n    <span class=\"brand\">LawSikho<\/span>\n  <\/div>\n<\/div>\n<\/div>\n<\/figure>\n\n<a id=\"h2-6\"><\/a><\/p>\n<h2>Should a company choose the tender offer or the stock-exchange route?<\/h2>\n<p>A company should pick the route by deal size and objective: the tender route suits large, fixed-price, promoter-inclusive buybacks above the cap, while the stock-exchange route suits smaller, faster, market-priced repurchases. There is no single &#8220;better&#8221; route, only a better fit for a given deal. Getting the fit right saves cost and time; getting it wrong means restructuring the offer after the board has already committed.<\/p>\n<p>So which route is actually cheaper? That is the wrong first question. The choice matters because the two routes differ on almost every axis that affects a treasury decision, and cost is only one of them. Size, pricing, promoter participation, speed, and disclosure load all move together depending on which route you pick. But the sensible order is still to fix the objective first, then let the constraints select the route.<\/p>\n<h3>Tender offer versus stock-exchange route, side by side<\/h3>\n<p>The cleanest way to compare the two is a side-by-side table. The comparison below (rendered as an infographic in this section) sets out the axes that usually decide the call.<\/p>\n<table>\n<thead>\n<tr>\n<th>Axis<\/th>\n<th>Tender offer<\/th>\n<th>Stock-exchange (open-market) route<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Size cap<\/td>\n<td>Up to the Section 68 aggregate (25% of paid-up capital plus free reserves)<\/td>\n<td>Below 15% of paid-up capital plus free reserves<\/td>\n<\/tr>\n<tr>\n<td>Merchant banker<\/td>\n<td>Typically used; heavier process<\/td>\n<td>Optional under the 2026 amendment<\/td>\n<\/tr>\n<tr>\n<td>Pricing<\/td>\n<td>Fixed price, announced in advance, usually at a premium<\/td>\n<td>Market prices up to a ceiling; no single fixed price<\/td>\n<\/tr>\n<tr>\n<td>Promoter participation<\/td>\n<td>Promoters can tender their shares<\/td>\n<td>Promoters frozen from dealing in the ISIN during the offer<\/td>\n<\/tr>\n<tr>\n<td>Timeline<\/td>\n<td>Structured tender process<\/td>\n<td>Compressed window, reported at up to 66 working days<\/td>\n<\/tr>\n<tr>\n<td>Best-fit use case<\/td>\n<td>Large capital return, premium exit, promoter participation<\/td>\n<td>Smaller, faster, market-linked repurchase<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The table also explains why a very large buyback still uses the tender route. Once a company wants to return more than the sub-15% open-market cap allows, or wants promoters to participate, the tender route is the only structure that fits. The open-market route is the tool for the smaller, quicker job.<\/p>\n<h3>What actually reversed between the 2023 and 2026 amendments?<\/h3>\n<p>What reversed is the direction of travel on the open-market route. The 2023 amendment tapered and then set the open-market stock-exchange route on a path to closure, withdrew the odd-lot method, and compressed the offer window; the 2026 amendment restored the stock-exchange route with a sub-15% cap and made the merchant banker optional. In other words, 2023 was the contraction and 2026 is the selective expansion.<\/p>\n<p>The nuance most summaries miss is that 2026 is not a full return to the pre-2023 world. The route came back, but with a tighter cap and a lighter intermediary requirement than before, which is a different balance from either the old open-market regime or the closed 2025 position. It is a third setting, not a rewind.<\/p>\n<h3>How does the new framework align with international practice?<\/h3>\n<p>SEBI has framed the reinstatement as part of aligning Indian buyback practice with international norms, where open-market repurchases are a standard capital-return tool. In many developed markets, companies routinely buy back shares on the exchange within disclosure and volume limits, and the Indian framework now moves closer to that model while keeping India-specific guardrails like the ISIN freeze and the MPS bar. The alignment is on the mechanism, not a wholesale import.<\/p>\n<p>Buyback route choice is one instance of a broader structuring skill, the same judgment that goes into <a href=\"https:\/\/lawsikho.com\/blog\/cross-border-ma-share-swap-rules-india\/\" target=\"_blank\" rel=\"noopener\">structuring cross-border share-swap deals<\/a>, where the form of a transaction is chosen to fit its objective and its regulatory envelope. The common thread is matching the instrument to the goal. A capital return, a share swap, an open offer: each is a structuring call before it is a compliance exercise.<\/p>\n\n\n<p>\n\n<figure class=\"ls-infographic-wrap\" style=\"margin:2rem 0;\">\n<div class=\"ls-ig-routes\" style=\"margin:2rem 0;max-width:800px;\">\n<style>\n.ls-ig-routes, .ls-ig-routes *, .ls-ig-routes *::before, .ls-ig-routes *::after { box-sizing: border-box; margin: 0; padding: 0; }\n.ls-ig-routes { font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, sans-serif; color: #212121; line-height: 1.5; background: #ffffff; border: 1px solid #e0e0e0; border-radius: 8px; overflow: hidden; box-shadow: 0 2px 6px rgba(0,0,0,0.05); }\n.ls-ig-routes .ig-title { background: #1a237e; color: #ffffff; padding: 18px 24px; font-size: 19px; font-weight: 700; text-align: center; }\n.ls-ig-routes .ig-title small { display: block; font-size: 13px; font-weight: 400; opacity: 0.85; margin-top: 5px; }\n.ls-ig-routes .ig-headers { display: grid; grid-template-columns: 0.8fr 1.1fr 1.1fr; background: #ff6f00; color: #ffffff; font-weight: 700; font-size: 13px; }\n.ls-ig-routes .ig-headers > div { padding: 13px 16px; border-right: 1px solid rgba(255,255,255,0.25); text-align: center; }\n.ls-ig-routes .ig-headers > div:first-child { text-align: left; }\n.ls-ig-routes .ig-headers > div:last-child { border-right: none; }\n.ls-ig-routes .ig-row { display: grid; grid-template-columns: 0.8fr 1.1fr 1.1fr; border-bottom: 1px solid #e0e0e0; font-size: 14px; }\n.ls-ig-routes .ig-row:nth-child(even) { background: #f5f5f5; }\n.ls-ig-routes .ig-row:last-child { border-bottom: none; }\n.ls-ig-routes .ig-cell { padding: 14px 16px; border-right: 1px solid #e0e0e0; }\n.ls-ig-routes .ig-cell:last-child { border-right: none; }\n.ls-ig-routes .ig-axis { font-weight: 700; color: #1a237e; }\n.ls-ig-routes .ig-tender { color: #424242; background: rgba(0,0,0,0.02); }\n.ls-ig-routes .ig-sx { color: #212121; background: rgba(255,111,0,0.06); }\n.ls-ig-routes .ig-foot { display: flex; justify-content: space-between; align-items: center; flex-wrap: wrap; gap: 8px; padding: 14px 24px; background: #1a237e; color: #ffffff; font-size: 12px; }\n.ls-ig-routes .ig-foot .src { opacity: 0.85; max-width: 600px; }\n.ls-ig-routes .ig-foot .brand { font-weight: 700; letter-spacing: 0.5px; }\n@media (max-width: 600px) {\n  .ls-ig-routes .ig-headers, .ls-ig-routes .ig-row { grid-template-columns: 1fr; }\n  .ls-ig-routes .ig-cell, .ls-ig-routes .ig-headers > div { border-right: none; border-bottom: 1px solid #e0e0e0; text-align: left; }\n  .ls-ig-routes .ig-cell:last-child, .ls-ig-routes .ig-headers > div:last-child { border-bottom: none; }\n  .ls-ig-routes .ig-axis { background: #1a237e; color: #ffffff; }\n  .ls-ig-routes .ig-tender::before { content: \"Tender offer: \"; font-weight: 700; color: #616161; }\n  .ls-ig-routes .ig-sx::before { content: \"Stock-exchange route: \"; font-weight: 700; color: #ff6f00; }\n  .ls-ig-routes .ig-title { font-size: 17px; }\n}\n<\/style>\n<div role=\"figure\" aria-label=\"Comparison of the tender-offer route and the stock-exchange open-market route for buybacks under the SEBI 2026 amendment\">\n  <div class=\"ig-title\">Tender offer versus stock-exchange route<small>Two routes to a buyback under the SEBI 2026 amendment, compared<\/small><\/div>\n  <div class=\"ig-headers\">\n    <div>Axis<\/div>\n    <div>Tender offer<\/div>\n    <div>Stock-exchange (open-market) route<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-axis\">Size cap<\/div>\n    <div class=\"ig-cell ig-tender\">Up to the Section 68 aggregate (25% of paid-up capital plus free reserves)<\/div>\n    <div class=\"ig-cell ig-sx\">Less than 15% of paid-up capital plus free reserves<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-axis\">Merchant banker<\/div>\n    <div class=\"ig-cell ig-tender\">Typically appointed; heavier process<\/div>\n    <div class=\"ig-cell ig-sx\">Optional under the 2026 amendment<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-axis\">Pricing<\/div>\n    <div class=\"ig-cell ig-tender\">Fixed price, announced in advance, usually at a premium<\/div>\n    <div class=\"ig-cell ig-sx\">Market prices up to a ceiling; no single fixed price<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-axis\">Promoter participation<\/div>\n    <div class=\"ig-cell ig-tender\">Promoters can tender their shares<\/div>\n    <div class=\"ig-cell ig-sx\">Promoters barred from dealing in the ISIN during the offer (ISIN freeze)<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-axis\">Timeline<\/div>\n    <div class=\"ig-cell ig-tender\">Structured tender process<\/div>\n    <div class=\"ig-cell ig-sx\">Open within 4 working days; close within 66 working days of opening<\/div>\n  <\/div>\n  <div class=\"ig-row\">\n    <div class=\"ig-cell ig-axis\">Best-fit use case<\/div>\n    <div class=\"ig-cell ig-tender\">Large capital return, premium exit, promoter participation<\/div>\n    <div class=\"ig-cell ig-sx\">Smaller, faster, market-linked repurchase<\/div>\n  <\/div>\n  <div class=\"ig-foot\">\n    <span class=\"src\">No single better route, only a better fit for the deal. Source: Companies Act, 2013 s.68; SEBI (Buy-Back of Securities) Regulations, 2018 and 2026 Amendment.<\/span>\n    <span class=\"brand\">LawSikho<\/span>\n  <\/div>\n<\/div>\n<\/div>\n<\/figure>\n\n<a id=\"h2-7\"><\/a><\/p>\n<h2>What do the SEBI (Buy-Back of Securities) Amendment Regulations 2026 mean for companies, compliance officers and investors?<\/h2>\n<p>The SEBI (Buy-Back of Securities) Amendment Regulations 2026 move buyback compliance in-house, raising demand for company-secretary and secretarial-audit capability, giving companies a cheaper route, and giving retail investors a new open-market exit. The reform touches three groups differently, and reading it through each lens is the fastest way to see what actually changes on the ground. One rule; three sets of consequences.<\/p>\n<p>The through-line is a transfer of responsibility from external intermediaries to internal functions. That transfer is the reform&#8217;s real content, and everything below follows from it.<\/p>\n<h3>What changes for companies and their boards?<\/h3>\n<p>For companies and their boards, the amendment offers a cheaper, faster route and, with it, direct ownership of the compliance chain. The board and its committees now sit closer to the buyback than they did when a merchant banker sat in between, which means the audit committee and the independent directors carry more of the oversight. That is a governance gain if the board is engaged and a governance gap if it is not.<\/p>\n<p>But the practical implication is that a board should not treat an in-house buyback as a routine treasury action. It is a listed-company event with real disclosure exposure, and the minutes should show that the board asked the right questions about pricing, disclosure integrity, and the float. Boards that build a short internal playbook for it will run these repeatedly and cheaply.<\/p>\n<h3>What changes for company secretaries and compliance officers?<\/h3>\n<p>For company secretaries and compliance officers, the amendment turns in-house SEBI-buyback capability into directly billable, career-relevant work. As the merchant banker becomes optional, the binding constraint on running a buyback becomes whether the company&#8217;s own compliance function can carry it, and that skill now sits inside the company rather than being bought in. Professionals who can own a buyback end to end become more valuable, not less.<\/p>\n<p>This is the second-order effect that job-market signals are already pointing to. The same shift also raises personal exposure, which is why it pays to understand <a href=\"https:\/\/lawsikho.com\/blog\/independent-director-liability-india-2026\/\" target=\"_blank\" rel=\"noopener\">the personal liability directors and officers carry<\/a> when they sign off on disclosures. The upside and the exposure travel together: more ownership, more value, more accountability.<\/p>\n<h3>Do open-market buybacks help retail investors or only large holders?<\/h3>\n<p>Open-market buybacks help retail investors chiefly by giving them a market exit and a support for the share price, rather than a guaranteed premium. In a tender offer, a small shareholder can tender into a fixed premium price on a proportionate basis, which is often a better direct deal for retail. In an open-market buyback, the benefit is indirect: the company&#8217;s buying supports the price, and any investor can sell into the market at prevailing prices during the window.<\/p>\n<p>So does the retail investor gain or lose from the restored route? On balance they gain optionality, because a market exit at a supported price is available to everyone without the proration limits of a tender. The honest caveat is that the headline premium of a tender offer is not there, so a retail holder chasing a fixed premium should read which route a company has chosen before assuming a windfall.<\/p>\n\n\n<a id=\"h2-8\"><\/a>\n<h2>Frequently asked questions on the SEBI buyback amendment 2026<\/h2>\n<p><strong>1. What are the SEBI (Buy-Back of Securities) Amendment Regulations, 2026?<\/strong>\nThey are amendments to the SEBI (Buy-Back of Securities) Regulations, 2018, notified on 1 July 2026. They restore the open-market buyback route through the stock exchange, cap it below 15% of paid-up capital plus free reserves, and make the merchant banker optional for a buyback.<\/p>\n<p><strong>2. When do the SEBI buyback amendment 2026 rules come into effect?<\/strong>\nThe rules take effect on 1 August 2026, having been notified on 1 July 2026. Any buyback launched on or after 1 August 2026 falls under the amended framework, including the restored stock-exchange route and the optional-intermediary regime.<\/p>\n<p><strong>3. What changed in the SEBI buyback rules from 1 August 2026?<\/strong>\nThree things changed. The open-market stock-exchange route, shut since April 2025, is back below a 15% cap; the merchant banker became optional, with its duties redistributed to the company and its officers; and the ISIN promoter freeze and minimum public shareholding bar continue to apply.<\/p>\n<p><strong>4. Is the open-market or stock-exchange buyback route allowed again?<\/strong>\nYes. The open-market buyback route through the stock exchange is permitted again from 1 August 2026, after being discontinued from 1 April 2025. It sits alongside the tender offer and the open-market book-building route as the three available methods, subject to a sub-15% cap.<\/p>\n<p><strong>5. What is the 15% cap on stock-exchange-route buybacks?<\/strong>\nThe stock-exchange route is limited to less than 15% of the company&#8217;s paid-up capital plus free reserves, computed on both a standalone and a consolidated basis. Anything at or above 15% must use the tender route. The cap is a genuine sub-15% ceiling, not a round-figure limit the company can reach.<\/p>\n<p><strong>6. Is a merchant banker still required for a buyback in 2026?<\/strong>\nNo. Under the 2026 amendment a merchant banker is no longer mandatory; appointing one is optional. Where a company appoints none, the certification, disclosure and oversight duties the merchant banker used to perform shift to the company, its compliance officer, and its statutory and secretarial auditors.<\/p>\n<p><strong>7. Who is responsible for buyback compliance if no merchant banker is appointed?<\/strong>\nThe company and its officers are. The duties redistribute across the company, the compliance officer, the statutory auditor, the secretarial auditor, and the stock exchange. The compliance officer executes the offer and signs the confirmations, while the board and audit committee are expected to supervise the disclosures.<\/p>\n<p><strong>8. What is the timeline for a stock-exchange-route buyback?<\/strong>\nThe offer must open within four working days of the public announcement and close within 66 working days of opening. The 66-working-day figure is an outer cap, not a minimum, so a company that meets its value target earlier can close sooner. At least 40% of the earmarked funds must be deployed in the first half of the offer period.<\/p>\n<p><strong>9. Can promoters participate in an open-market buyback through the stock exchange?<\/strong>\nNo. Promoters and the promoter group are frozen from dealing in the company&#8217;s shares in that ISIN for the duration of the open-market offer. Promoter participation is possible only in a tender offer, where promoters can tender their shares, not in the open-market route.<\/p>\n<p><strong>10. What is the ISIN-level promoter freeze during a buyback?<\/strong>\nIt is a bar on promoters and the promoter group trading in the company&#8217;s shares in that specific ISIN while the open-market buyback is live. Because the ISIN uniquely identifies the company&#8217;s equity, freezing activity at that level cleanly prevents insider trading around the company&#8217;s own market buying.<\/p>\n<p><strong>11. What is the minimum public shareholding bar on buybacks?<\/strong>\nA buyback cannot be run if it would push public shareholding below the mandatory minimum, which for most listed companies is a 25% public float. Since a buyback extinguishes shares and can raise promoter percentage, a company must model the post-buyback shareholding pattern before announcing the offer.<\/p>\n<p><strong>12. Can a company do successive buybacks, and what gap is required?<\/strong>\nNot immediately. Under Section 68(2)(g) of the Companies Act, 2013, no fresh buyback offer can be made within one year of the closure of the preceding offer, and the 2026 amendment ties the SEBI-route interval to that Companies Act period. The one-year cooling-off runs from the closure of the last offer, whether it was board- or shareholder-approved.<\/p>\n<p><strong>13. Why is SEBI reinstating the stock-exchange route now?<\/strong>\nBecause the tax change that had made open-market buybacks unattractive was reversed. With buyback proceeds moving from deemed-dividend treatment (October 2024) back to capital gains (April 2026), parity with an ordinary market sale returned, and the main reason for keeping the route shut fell away.<\/p>\n<p><strong>14. How does buyback tax work for shareholders after the Finance Act 2024 and 2026 changes?<\/strong>\nFrom October 2024, proceeds were taxed as a deemed dividend in the shareholder&#8217;s hands with no cost deduction. From April 2026, they are taxed as capital gains, with the cost of acquisition deductible. So a shareholder is now taxed on the gain rather than the gross receipt.<\/p>\n<p><strong>15. Do I pay capital gains or dividend tax on buyback proceeds in 2026?<\/strong>\nFrom 1 April 2026, buyback proceeds are taxed as capital gains, not as a deemed dividend. That restores parity with selling in the open market, where only the gain is taxed. This is general information, not tax advice; confirm your position with a qualified tax adviser.<\/p>\n<p><strong>16. Why 66 working days and not six months?<\/strong>\nThe compressed window, understood to be retained from the 2023 changes, is a discipline measure. A buyback stretched across months lets the company influence its own share price for longer and leaves the market uncertain about its trading intentions. A shorter outer limit forces the company to complete and exit.<\/p>\n<p><strong>17. Which route should a company choose, tender offer or stock exchange?<\/strong>\nIt depends on size and objective. The tender route suits large, fixed-price buybacks above the 15% cap and lets promoters participate. The stock-exchange route suits smaller, faster, market-priced repurchases where the merchant banker is optional. Fix the objective first, then let the constraints select the route.<\/p>\n<p><strong>18. Buyback versus dividend, which is better for returning capital?<\/strong>\nIt depends on the company&#8217;s goal and the shareholder&#8217;s tax position. A buyback returns cash to exiting shareholders and reduces share count, now taxed as capital gains from April 2026, while a dividend pays all shareholders and is taxed as income. Neither is universally better; the choice is deal-specific.<\/p>\n<a id=\"h2-9\"><\/a>\n<h2>References<\/h2>\n<h3>Case Law<\/h3>\n<ol>\n<li><a href=\"https:\/\/indiankanoon.org\/doc\/56819153\/\" target=\"_blank\" rel=\"noopener\">Vedanta Ltd. v. Securities and Exchange Board of India, Appeal No. 420 of 2021 and Appeal No. 486 of 2021 (SAT, order dated 5 October 2023)<\/a>. Securities Appellate Tribunal, Mumbai; the Tribunal set aside the adjudicating officer&#8217;s penalty order and held that the 2014 open-market buyback announcement of the Vedanta-group company was not misleading.<\/li>\n<\/ol>\n<h3>Statutes<\/h3>\n<ol>\n<li><a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/2114\" target=\"_blank\" rel=\"noopener\">Companies Act, 2013<\/a>. Sections cited: 68, 68(2)(g), 69, 70 (statutory buyback limits, conditions and the one-year interval between offers).<\/li>\n<li><a href=\"https:\/\/www.sebi.gov.in\/legal\/regulations\/sep-2018\/securities-and-exchange-board-of-india-buy-back-of-securities-regulations-2018_40327.html\" target=\"_blank\" rel=\"noopener\">SEBI (Buy-Back of Securities) Regulations, 2018<\/a>. Parent regulations amended by the 2026 amendment.<\/li>\n<li>Finance (No.2) Act, 2024: abolished the company-level buyback tax under Section 115QA of the Income-tax Act, 1961 and shifted proceeds to deemed-dividend treatment under Section 2(22)(f) from 1 October 2024.<\/li>\n<li>Income-tax Act, 2025 (as amended by the Finance Act, 2026): capital-gains treatment of buyback proceeds effective 1 April 2026.<\/li>\n<li><a href=\"https:\/\/www.sebi.gov.in\/sebiweb\/home\/HomeAction.do?doListing=yes&amp;sid=1&amp;ssid=82&amp;smid=0\" target=\"_blank\" rel=\"noopener\">SEBI (Buy-Back of Securities) (Amendment) Regulations, 2026<\/a>. Notified 1 July 2026, effective 1 August 2026 (SEBI gazette notifications).<\/li>\n<\/ol>\n<p>This article is for informational purposes only and does not constitute legal advice. For specific legal guidance, consult a qualified legal professional.<\/p>\n\n\n\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"Article\",\n  \"headline\": \"SEBI (Buy-Back of Securities) Amendment Regulations 2026\",\n  \"description\": \"SEBI (Buy-Back of Securities) Amendment Regulations 2026 restore the open-market route from 1 August 2026, capped below 15%, merchant banker optional.\",\n  \"author\": {\n    \"@type\": \"Organization\",\n    \"name\": \"LawSikho\",\n    \"url\": \"https:\/\/lawsikho.com\"\n  },\n  \"publisher\": {\n    \"@type\": \"Organization\",\n    \"name\": \"LawSikho\",\n    \"logo\": {\n      \"@type\": \"ImageObject\",\n      \"url\": \"https:\/\/lawsikho.com\/logo.png\"\n    }\n  },\n  \"datePublished\": \"2026-07-27\",\n  \"dateModified\": \"2026-07-27\",\n  \"mainEntityOfPage\": {\n    \"@type\": \"WebPage\",\n    \"@id\": \"https:\/\/lawsikho.com\/blog\/sebi-buy-back-of-securities-amendment-regulations-2026\"\n  },\n  \"image\": \"https:\/\/lawsikho.com\/blog\/images\/sebi-buy-back-of-securities-amendment-regulations-2026.png\",\n  \"citation\": [\n    {\n      \"@type\": \"CreativeWork\",\n      \"name\": \"Vedanta Ltd. & Ors. v. 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The compliance officer executes the offer and signs the confirmations, while the board and audit committee are expected to supervise the disclosures.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What is the timeline for a stock-exchange-route buyback?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"The offer must open within four working days of the public announcement and close within 66 working days of opening. The 66-working-day figure is an outer cap, not a minimum, so a company that meets its value target earlier can close sooner. At least 40% of the earmarked funds must be deployed in the first half of the offer period.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Can promoters participate in an open-market buyback through the stock exchange?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"No. Promoters and the promoter group are frozen from dealing in the company's shares in that ISIN for the duration of the open-market offer. Promoter participation is possible only in a tender offer, where promoters can tender their shares, not in the open-market route.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What is the ISIN-level promoter freeze during a buyback?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"It is a bar on promoters and the promoter group trading in the company's shares in that specific ISIN while the open-market buyback is live. Because the ISIN uniquely identifies the company's equity, freezing activity at that level cleanly prevents insider trading around the company's own market buying.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"What is the minimum public shareholding bar on buybacks?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"A buyback cannot be run if it would push public shareholding below the mandatory minimum, which for most listed companies is a 25% public float. Since a buyback extinguishes shares and can raise promoter percentage, a company must model the post-buyback shareholding pattern before announcing the offer.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Can a company do successive buybacks, and what gap is required?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Not immediately. Under Section 68(2)(g) of the Companies Act, 2013, no fresh buyback offer can be made within one year of the closure of the preceding offer, and the 2026 amendment ties the SEBI-route interval to that Companies Act period. The one-year cooling-off runs from the closure of the last offer, whether it was board- or shareholder-approved.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Why is SEBI reinstating the stock-exchange route now?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"Because the tax change that had made open-market buybacks unattractive was reversed. With buyback proceeds moving from deemed-dividend treatment (October 2024) back to capital gains (April 2026), parity with an ordinary market sale returned, and the main reason for keeping the route shut fell away.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"How does buyback tax work for shareholders after the Finance Act 2024 and 2026 changes?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"From October 2024, proceeds were taxed as a deemed dividend in the shareholder's hands with no cost deduction. From April 2026, they are taxed as capital gains, with the cost of acquisition deductible. So a shareholder is now taxed on the gain rather than the gross receipt.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Do I pay capital gains or dividend tax on buyback proceeds in 2026?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"From 1 April 2026, buyback proceeds are taxed as capital gains, not as a deemed dividend. That restores parity with selling in the open market, where only the gain is taxed. This is general information, not tax advice; confirm your position with a qualified tax adviser.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Why 66 working days and not six months?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"The compressed window, understood to be retained from the 2023 changes, is a discipline measure. A buyback stretched across months lets the company influence its own share price for longer and leaves the market uncertain about its trading intentions. A shorter outer limit forces the company to complete and exit.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Which route should a company choose, tender offer or stock exchange?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"It depends on size and objective. The tender route suits large, fixed-price buybacks above the 15% cap and lets promoters participate. The stock-exchange route suits smaller, faster, market-priced repurchases where the merchant banker is optional. Fix the objective first, then let the constraints select the route.\"\n      }\n    },\n    {\n      \"@type\": \"Question\",\n      \"name\": \"Buyback versus dividend, which is better for returning capital?\",\n      \"acceptedAnswer\": {\n        \"@type\": \"Answer\",\n        \"text\": \"It depends on the company's goal and the shareholder's tax position. A buyback returns cash to exiting shareholders and reduces share count, now taxed as capital gains from April 2026, while a dividend pays all shareholders and is taxed as income. Neither is universally better; the choice is deal-specific.\"\n      }\n    }\n  ]\n}\n<\/script>\n\n","protected":false},"excerpt":{"rendered":"<p>SEBI (Buy-Back of Securities) Amendment Regulations 2026 restore the open-market route from 1 August 2026, capped below 15%, merchant banker optional.<\/p>\n","protected":false},"author":44,"featured_media":7171,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[666],"tags":[2458,2455,2454,2456],"coauthors":[2435],"class_list":["post-7170","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-securities-and-exchange-board-of-india-act","tag-buyback-tax-2026-capital-gains","tag-open-market-buyback-stock-exchange-route","tag-sebi-buyback-amendment-2026","tag-tender-offer-vs-stock-exchange-route"],"_links":{"self":[{"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/posts\/7170","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/comments?post=7170"}],"version-history":[{"count":1,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/posts\/7170\/revisions"}],"predecessor-version":[{"id":7172,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/posts\/7170\/revisions\/7172"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/media\/7171"}],"wp:attachment":[{"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/media?parent=7170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/categories?post=7170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/tags?post=7170"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/lawsikho.com\/blog\/wp-json\/wp\/v2\/coauthors?post=7170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}