SEBI Reopens Open-Market Buyback Route; India Inc To Get Greater Flexibility In Capital Allocation

SEBI has reintroduced the open-market share buyback route through stock exchanges, giving India Inc. greater flexibility in managing surplus cash and capital allocation. The move allows listed companies to repurchase shares directly from the market, alongside the existing tender offer method. The decision follows changes in taxation rules that addressed earlier concerns around unequal treatment of shareholders. The reform is expected to improve price discovery, simplify buybacks, and help companies efficiently return capital to shareholders. “Permitting open market buybacks represents a significant benefit for companies, as repurchases are executed at prevailing market prices rather than at a predetermined fixed price. This mechanism can be especially beneficial for companies whose current stock price does not fully reflect the underlying value of their business,” said Bir Bahadur Singh Sachar, Partner at JSA Advocates & Solicitors.Read more