SEBI Proposes Reintroducing Open Market Buy-Back via Stock Exchange

Consultation paper dated 02.04.2026

The Securities and Exchange Board of India (SEBI) has issued a consultation paper inviting comments from the public and stakeholders on a proposal to reintroduce buy-back of shares through the open market via stock exchange as an additional method under the SEBI (Buy-Back of Securities) Regulations, 2018.

1. Background – Discontinuation of Open Market Method

The open market buy-back method was discontinued with effect from 1st April 2025 due to:

• Concerns over equitable treatment of shareholders
• Issues arising from the then-prevailing taxation framework, which created disparities

2. Change in Taxation Framework

Subsequent changes in tax laws have addressed earlier concerns:

• Buy-back proceeds are now taxed as capital gains in the hands of shareholders
• This removes the tax arbitrage and inequity issues that existed earlier

3. Rationale for Reintroduction

Stakeholders have represented that the open market route:

• Enhances market efficiency
• Improves liquidity
• Facilitates better price discovery

Considering these benefits, SEBI has proposed to reintroduce this method.

4. Proposed Mechanism

• Buy-back through open market will be conducted via a separate window on stock exchanges
• It will be subject to existing regulatory safeguards and provisions under the Buy-Back Regulations

5. Call for Public Comments

SEBI has invited comments and feedback from stakeholders on the proposal, indicating a consultative approach before finalising the regulatory framework.

6. Conclusion

The proposal reflects SEBI’s intent to balance investor protection with market efficiency, by reconsidering the open market buy-back route in light of the evolved taxation regime and stakeholder feedback.

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