Notification No. SEBI/LAD-NRO/GN/2026/306 dated July 1, 2026
Background
The Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 were published in the Gazette of India on September 11, 2018, vide notification No. SEBI/LAD-NRO/GN/2018/32, and were last amended on November 20, 2024 by the Securities and Exchange Board of India (Buy-Back of Securities) (Second Amendment) Regulations, 2024. SEBI has now notified the Securities and Exchange Board of India (Buy-Back of Securities) (Amendment) Regulations, 2026, in exercise of powers under Sections 11(1), 11(2), and 30 of the SEBI Act, 1992, read with Section 68(2)(f) of the Companies Act, 2013. While the notification takes effect from the date of its publication in the Official Gazette, several of the substantive changes are prospectively effective from August 1, 2026.
This amendment represents one of the most substantial recalibrations of the buy-back framework in recent years, introducing a cap on open market buy-backs, a promoter shareholding freeze mechanism, and — most notably — an option for companies to dispense with the mandatory engagement of a merchant banker.
Key Amendments
1. Fifteen Percent Cap on Open Market Buy-Backs (Regulation 4)
A new third proviso has been inserted in Regulation 4(iv)(b), providing that with effect from August 1, 2026, buy-back from the open market through the stock exchange shall be restricted to less than fifteen percent of the paid-up capital and free reserves of the company, computed on both a standalone and consolidated basis. The existing transitional dispensation (previously applicable from April 1, 2025) has also been extended till July 31, 2026, bridging the gap until the new cap takes effect.
2. Cooling-Off Period Aligned with the Companies Act, 2013 (Regulation 4(vii))
Sub-regulation (vii) of Regulation 4 has been substituted to provide that a company shall not make any offer of buy-back within the period prescribed under the Companies Act, 2013 from the date of closure of the preceding buy-back offer, replacing the earlier SEBI-specific cooling-off timeline.
3. Prohibition on Breach of Minimum Public Shareholding Norms (Regulation 4(xi))
A new sub-regulation (xi) has been inserted prohibiting a company from proposing a buy-back that would result in a breach of the minimum public shareholding requirements prescribed under the Securities Contracts (Regulation) Rules, 1957, or specified under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This introduces an explicit, standalone compliance check that was not previously codified within the buy-back regulations themselves.
4. Revised Timelines for Open Market Buy-Back Offers (Regulation 17)
Regulation 17(i) has been omitted, and a new sub-regulation (iii) has been inserted providing that, with effect from August 1, 2026, the buy-back offer shall open within four working days from the date of the public announcement and close within sixty-six working days from the date of opening of the offer. The transitional relief earlier available till March 31, 2025 has similarly been extended till July 31, 2026.
5. Mandatory Shareholder Intimation via Electronic Mode (Regulations 16 and 22A)
A new clause has been inserted under Regulation 16(iv) and a corresponding new sub-regulation under Regulation 22A, requiring the company to send an intimation through electronic mode regarding the open market buy-back offer, within one working day from the date of the public announcement, to persons who were shareholders as on the date of the announcement.
6. Revised Public Announcement Timeline (Regulation 16(iv)(b))
Clause (b) of Regulation 16(iv) has been substituted to require that the public announcement be made within two working days from the date of passing of the board resolution, or the date of declaration of results of the postal ballot for a special resolution, as applicable, containing disclosures as specified in Schedule IV.
7. Freeze on Promoter Shareholding During Buy-Back (Regulation 24)
A new clause (ea) has been inserted in Regulation 24(i), requiring that shares or other specified securities held by promoters and the promoter group (including associates), for which the buy-back is undertaken, remain frozen at the ISIN level from the date of the board/special resolution until closure of the offer. The freeze does not apply, for the limited purpose of tendering, in the case of a tender offer buy-back. Transfers pursuant to invocation of pre-existing encumbrances may be permitted, subject to the freeze continuing to apply thereafter and subject to any conditions SEBI may specify. Companies are required to instruct depositories accordingly to give effect to the freeze.
8. Bank Guarantee Validity and Release Conditions (Regulation 20)
Regulation 20 has been amended to make the requirements under sub-regulation (ii) mandatory (substituting "may" with "shall"). Clauses (a) and (b) of sub-regulation (iv) have been substituted to require that the bank guarantee be in favour of the merchant banker and remain valid for thirty working days after expiry of the buy-back period or completion of all obligations under the regulations, whichever is later, and that the guarantee be released by the merchant banker only after completion of all such obligations.
9. Option to Dispense with Merchant Banker Engagement — New Regulation 24A
This is the most significant structural change introduced by the amendment. A new Regulation 24A has been inserted, providing that engagement of a merchant banker shall be discretionary on the part of a company undertaking a buy-back. Where a company dispenses with the appointment of a merchant banker, the responsibilities otherwise discharged by the merchant banker are reassigned as follows:
| Activity/Responsibility | Relevant Regulation(s) | Assigned To |
|---|---|---|
| Filing of Letter of Offer and Public Announcement, ensuring contents are true, fair and adequate | 8(i)(a), 16(iv)(a), 22A, 25(iv), 25(v), 25(vii), Schedule V | Company |
| Certifying compliance with regulations; due diligence certification | 8(i)(aa), 25(vi) | Secretarial Auditor |
| Oversight and operation of escrow accounts, bank guarantees, cash deposits, approved securities, invocation rights, release/forfeiture directions | 9(xi)(c)(ii), 9(xi)(d)–(g), 20(ii)(b)–(c), 20(iii), 20(iv)(a)–(b), 20(viii), 25(ii), 25(ix) | Statutory Auditor |
| Certification of adequacy of sell orders and VWAP | 20(viii)(a)–(b) | Stock Exchanges |
| Presence during extinguishment/destruction of securities (open market buy-back) | 21(iii) | Compliance Officer |
| Certification/verification of compliance with extinguishment of securities | 11(iii)(a) | Compliance Officer |
| Submission of final report | 25(x) | Company |
| Ensuring availability of funds and firm financial arrangements | Explanation to 9(xi)(c)(ii), 25(i), 25(iii) | Company |
| Compliance with relevant provisions of the Companies Act, 2013 | 25(viii) | Company |
Consequential to this insertion, Schedule V has been amended to omit the references to clauses "8(i)(c)" and "22(iv)".
10. Other Clarificatory and Drafting Amendments
The amendment also makes a series of clarificatory changes across Regulations 8, 9, 11, 16, and 22A — primarily inserting missing articles ("the," "a," "of") and correcting cross-references — which do not alter substantive rights or obligations but improve textual precision.
Analysis
The 2026 amendment marks a decisive shift in the regulatory philosophy underlying buy-back transactions. The introduction of Regulation 24A effectively decouples the buy-back process from mandatory merchant banker involvement, distributing what were previously consolidated intermediary functions across the Secretarial Auditor, Statutory Auditor, Stock Exchanges, and the company's Compliance Officer. For Company Secretaries and Secretarial Auditors in particular, this significantly expands the scope of due diligence certification responsibilities in buy-backs where no merchant banker is engaged.
The fifteen percent cap on open market buy-backs, coupled with the tightened offer timelines and the promoter shareholding freeze, reflects SEBI's continuing focus on curbing potential misuse of the open market route and reinforcing investor protection through tighter procedural discipline.
Companies planning buy-backs on or after August 1, 2026 should reassess their internal compliance frameworks, evaluate whether to continue engaging a merchant banker or transition to the Regulation 24A structure, and update escrow, timeline, and disclosure documentation accordingly.
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