The Securities and Exchange Board of India (SEBI) has approved a major set of regulatory changes that reintroduce open-market share buybacks through stock exchanges and streamline the launch process for Alternative Investment Funds (AIFs). The decisions were taken at the regulator’s board meeting on Friday and are aimed at improving market flexibility while strengthening investor safeguards.
Under the revised framework, listed companies will once again be permitted to carry out share buybacks via the stock exchange route starting August 1, 2026. The mechanism had earlier been phased out in favour of the tender offer route, but has now been revived following industry feedback seeking greater operational flexibility in capital management decisions.
The regulator has introduced strict timelines and utilisation norms to ensure transparency and prevent misuse of the buyback window. Companies undertaking buybacks through the exchange route must complete the process within 66 working days, while at least 40 per cent of the total buyback amount must be deployed in the first half of the period. These measures are intended to discourage end-loaded execution and ensure consistent market participation.
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Several additional safeguards have also been introduced. Promoters will not be allowed to participate in buybacks conducted via the stock exchange mechanism, and their shareholding will remain frozen throughout the buyback period to prevent any changes in ownership structure during the process. While the appointment of a merchant banker has been made optional to reduce compliance costs, companies must still adhere to minimum public shareholding requirements.
Alongside the buyback reforms, SEBI has also cleared a new framework to accelerate the launch of AIF schemes. The move is designed to reduce procedural delays and enable fund managers to bring investment products to market more quickly, while maintaining regulatory oversight and investor protection standards.
Together, the decisions reflect SEBI’s broader push to simplify regulatory processes, improve capital market efficiency, and encourage wider participation from both companies and investors in India’s evolving financial ecosystem.
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