The Securities and Exchange Board of India (SEBI) has approved the implementation of open market share buy-backs via stock exchanges for effective August 1, 2026, at its Board Meeting on June 19, 2026. The Primary Market Advisory Committee (PMAC), headed by Keki Mistry, had recommended the complete withdrawal of the mechanism on April 1, 2025, due to the structural inequities, front-running risks and tax distortions it provides to promoters as compared to retail investors. A key enabling factor for the revival is a significant taxation reform in the Income Tax Act, 2025, which has been introduced to tax buy-back proceeds as capital gains in the hands of shareholders, thus removing the unfairness in the market that had been caused by preferential treatment.
Revised Framework
The reintroduction mechanism is accompanied by strengthened safeguards. The companies should complete the whole buy-back process within a maximum time of 66 working days from the date of opening. To avoid cosmetic announcements, a minimum of 40% of the earmarked buy-back funds must be deployed in the first half of the buy-back period. “Promoters and their associates will not be allowed to participate in the buy-back and their existing shareholding will remain locked-in during the entire period of active buy-back. This will curb the selective participation that had raised regulatory concerns,” the statement said.
Market Implications
The new framework offers listed companies more flexibility to deploy excess capital, in addition to the existing tender offer route, but with significantly tighter controls on structure than under the pre-2025 regime. Companies looking to use this mechanism from August 1, 2026, are advised to go through SEBI’s official notification and consult legal and compliance counsel to ensure that they meet the mandatory deployment timelines and promoter lock-in provisions before proceeding with any buy-back process.