SEBI Reinstates Open Market Stock Buy-Backs Following Fiscal Changes

The Securities and Exchange Board of India (SEBI) has reinstated open market stock buy-backs during its first board meeting for fiscal year 2027. This decision comes after the Finance Ministry modified tax regulations surrounding these transactions in the Union Budget for 2026.

The new framework allows companies to announce buy-backs electronically, with a mandatory completion timeline of 66 working days. Furthermore, a minimum of 40% of the funds raised through buy-backs must be utilised within 33 working days, equivalent to half of the buy-back duration.

SEBI has clarified that buy-backs will be conducted through the standard trading window. The engagement of merchant bankers for managing buy-back transactions is now optional. Competent officers within the companies will be designated for handling these processes.

Chairperson Tuhin Kanta Pandey addressed the media, indicating that a study assessing the impact of derivatives trading on retail investors is scheduled for release in July.

In additional decisions, SEBI approved a streamlined process for transferring securities from deceased individuals to their legal heirs, featuring reduced documentation costs. This initiative aims at simplifying claims for small amounts.

The board has also modified regulations concerning municipal debt securities to advance the M-bond market. With these amendments, local government entities can issue bonds to refinance existing obligations for specific projects. To promote retail investment, local bodies can now offer incentives to certain groups, including senior citizens and women serving in the armed forces.

Moreover, SEBI has adopted recommendations from an independent panel regarding the Small and Medium Enterprises (SME) capital-raising framework. Enhancements were also made to the Code of Conduct for SEBI members and amendments to the Employees’ Services Regulations.

Finally, changes to the social stock exchange framework are designed to facilitate investments, alongside reformed procedures concerning Alternative Investment Funds (AIFs).

These measures highlight SEBI’s commitment to deepening market participation and enhancing regulatory frameworks within India's capital markets.