The SEBI open market share buybacks proposal is set to reshape India’s capital markets, as the Securities and Exchange Board of India (SEBI) considers reintroducing the stock exchange route for buybacks. The SEBI open market share buybacks move comes after recent tax reforms that have aligned buyback taxation with capital gains, addressing earlier concerns around fairness and transparency.

In its latest consultation paper, SEBI has proposed allowing listed companies to undertake buybacks through the open market via stock exchanges as an additional method. This route was earlier discontinued due to issues related to price discovery and unequal participation among investors.

Key Highlights

• SEBI open market share buybacks proposal may return after tax changes improving market liquidity.
• New tax rules align buybacks with capital gains, boosting fairness and investor participation significantly 

Why SEBI Is Revisiting Open Market Buybacks

The open market route for buybacks was phased out from April 1, 2025, to make the process more transparent and shareholder-friendly, with greater reliance on the tender offer method.

However, recent tax changes have significantly altered the landscape. Under the new framework effective April 2026, buyback proceeds are taxed as capital gains rather than dividends, bringing parity with other equity transactions.

This shift has removed earlier tax inefficiencies, prompting SEBI to reconsider the SEBI open market share buybacks mechanism as a viable and flexible option for companies.

Impact on Companies and Investors

If approved, the SEBI open market share buybacks proposal will provide companies with greater flexibility in capital allocation and enable them to support share prices through gradual market purchases. Open market buybacks also improve liquidity and allow continuous price discovery compared to fixed-price tender offers.

Market experts believe the move could enhance investor confidence and align India’s buyback framework with global practices. Additionally, companies may benefit from better timing and execution of buybacks based on market conditions.

Also Read: SEBI Forms Panel to Streamline Advisory & Distributor Rules

SEBI has invited public comments on the proposal, indicating a potential policy shift in India’s equity market regulations. If implemented, the reintroduction of open market share buybacks could significantly impact corporate capital management strategies and overall market dynamics.