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SEBI Reopens Door to Open Market Share Buybacks
19 Jun
Summary
- SEBI allows open market buybacks starting August 1.
- Companies can repurchase shares directly from exchanges.
- Buyback period limit set at 60 days under new rules.
Effective August 1, the Securities and Exchange Board of India (SEBI) has authorized the reintroduction of open market share buybacks. This regulatory update permits companies to directly repurchase their shares from stock exchanges, a mechanism previously phased out. The new route is designed to offer a more efficient and equitable avenue for capital returns to shareholders, supplementing current tender offer procedures.
The open market buyback mechanism allows companies flexibility in purchasing shares from the secondary market over time. Under the revised regulations, the duration for these buybacks will be capped at 60 days. This strategic capital allocation tool enables firms to enhance earnings per share and signal confidence in their future prospects, addressing previous limitations in execution options.
