SEBI Proposes Reintroduction of Open Market Share Buy-Backs
SEBI has released a consultation paper seeking public input on reintroducing the open market buy-back of shares via stock exchanges, aiming to address previous issues of shareholder treatment and taxation. The proposal outlines regulatory safeguards, ensuring fair participation and transparency for companies and shareholders.
- Country:
- India
The Securities and Exchange Board of India (SEBI) unveiled a consultation paper on Thursday inviting public feedback on the potential reintroduction of open market share buy-backs through stock exchanges. This proposal is outlined under the SEBI (Buy-Back of Securities) Regulations, 2018.
This initiative addresses concerns that led to the discontinuation of this buy-back method from April 1, 2025, focusing on equitable shareholder treatment and taxation complexities. Historically, companies could repurchase shares via tender offers or the open market, but the latter was phased out due to perceived inequalities, as some shareholders didn't receive similar tax advantages.
Reflecting on the updated taxation framework, SEBI highlighted the plausible benefits of reviving open market buy-backs. Such mechanisms are globally recognized for price discovery and liquidity enhancement. Industry groups support the move, emphasizing its potential to stabilize markets and foster long-term shareholder value.
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