What is a share buyback? A plain-English guide
A share buyback is when a company buys back its own shares from its shareholders, returning cash to them and reducing the number of shares outstanding. In India it is governed by the SEBI (Buy-back of Securities) Regulations, 2018. A buyback is the opposite of raising capital: instead of taking money in, the company pays money out to shrink its own equity base. SEBI allows two routes, the tender offer and the open market purchase through the stock exchange, and both are open again: read on 22 September 2026, the open market route returned on 1 August 2026 after sixteen months barred. The same amendment freezes the promoter group's shares in the securities the buyback covers at ISIN level for the whole buyback period, under Regulation 24(i)(ea) inserted with effect from 1 August 2026.
Definition
A share buyback
is a company repurchasing its own shares from shareholders, which returns cash to them and cuts the total shares outstanding. In India it runs under the SEBI (Buy-back of Securities) Regulations, 2018, by tender offer on a record date or, again since 1 August 2026, on the stock exchange. Source: those regulations, last amended 6 July 2026.
How does a share buyback work?
The company announces the buyback, its size, and its route, and files the details with the exchanges. In a tender offer, it fixes a price and a record date, and buys a set number of shares directly from shareholders who tender them, in proportion to their holding. SEBI reserves 15% of the buyback for small shareholders under this route. Once complete, the bought-back shares are extinguished, so the share count falls.
What is the maximum size of a buyback?
SEBI caps how much a company can repurchase.
25%
Maximum buyback as a share of paid-up capital plus free reserves
Source: SEBI (Buy-back of Securities) Regulations, 2018
Was the open market route not discontinued?
It was, and then it came back. In an open market buyback the company buys its own shares on the exchange over time rather than from shareholders on a record date. SEBI's 2023 amendment stepped the route's size cap down (fifteen per cent of paid-up capital and free reserves to March 2023, ten per cent to March 2024, five per cent to March 2025) and then barred it, because a single shareholder's sell order could be fully matched against the company's buy order, leaving other shareholders without an equal chance to participate.
Read the regulation as it stands on 22 September 2026 and the bar has an end date. Regulation 4 now says open market buy-back through the stock exchange "shall not be allowed with effect from April 1, 2025 till July 31, 2026", and a further proviso, inserted by the SEBI (Buy-back of Securities) (Amendment) Regulations, 2026 with effect from 1 August 2026, restores it at less than fifteen per cent of paid-up capital and free reserves on both standalone and consolidated statements. Regulation 17 sets the new clock: the offer opens within four working days of the public announcement and closes within sixty-six working days. What changed in that reopening is covered in SEBI open market buyback: what changed in 2026.
That is the same amendment, effective the same day, that added the promoter freeze below.
What happens to promoter shares while a buyback is open?
They stop moving. Regulation 24(i)(e) already barred the promoters and their associates from dealing in the company's shares on the exchange or off-market, including inter-se transfers among promoters, from the date of the board resolution or special resolution till the offer closes. The SEBI (Buy-back of Securities) (Amendment) Regulations, 2026 added Regulation 24(i)(ea), effective 1 August 2026, which turns that prohibition into a depository-level freeze at ISIN level, and SEBI's circular dated 21 July 2026 gave the depositories until 1 August 2026 to build the framework for it. Tendering into a tender offer is carved out, and so is invocation of an encumbrance created before the buyback period, with the freeze following the invoked shares. Note which route that first carve-out names: in an open market buyback nobody tenders, so there is nothing for it to permit and the freeze runs unbroken for the whole offer. The detail is in promoter holding freeze during a buyback.
Buyback vs offer for sale: opposite flows
A buyback is often confused with an offer for sale, but they move shares in opposite directions.
| Share buyback | Offer for sale (OFS) | |
|---|---|---|
| Who acts | The company | Promoters or large holders |
| Share flow | Company buys shares back | Holders sell shares out |
| Effect on count | Shares outstanding fall | Shares outstanding unchanged |
| Cash goes to | Shareholders who tender | The selling shareholders |
For a fuller comparison, see OFS vs buyback.
A buyback also shifts the shareholding pattern, because the total share count drops and the percentages recompute. Every step of a buyback, the announcement, the record date, the price, and the acceptance, is disclosed to the exchanges and dated.
Flock reads those public disclosures and keeps each one stamped with its date and source. What a buyback means for your own holding is your call to make.
Frequently asked questions
How does a share buyback work in India?
A company repurchases its own shares from shareholders, which returns cash to them and reduces the total shares outstanding. It is governed by the SEBI (Buy-back of Securities) Regulations, 2018. The two routes are the tender offer and, since 1 August 2026 again, the open market purchase through the stock exchange. Source: SEBI (Buy-back of Securities) Regulations, 2018, read 22 September 2026.
What is the maximum size of a buyback?
A company cannot buy back more than 25% of its paid-up capital and free reserves in aggregate. The tender route also reserves 15% of the buyback for small shareholders. Source: SEBI (Buy-back of Securities) Regulations, 2018.
Is the open market buyback route allowed again?
Yes, from 1 August 2026. SEBI had cut the route's size limit in steps and then barred it, and the regulations now read that open market buy-back through the stock exchange was not allowed from 1 April 2025 till 31 July 2026, with a further proviso restoring it from 1 August 2026 at less than fifteen per cent of paid-up capital and free reserves. Source: SEBI (Buy-back of Securities) Regulations, 2018, Regulation 4, consolidated text last amended 6 July 2026, read 22 September 2026.
Are promoter shares frozen during a buyback?
Yes, since 1 August 2026. Regulation 24(i)(ea) of the SEBI (Buy-back of Securities) Regulations, 2018 keeps the shares held by the promoter, promoter group and their associates for which the buyback is undertaken frozen at ISIN level from the date of the buyback resolution till the closing of the offer, with a carve-out for tendering into a tender offer. Source: SEBI (Buy-back of Securities) Regulations, 2018, read 22 September 2026.
What is the difference between a tender buyback and open market?
In a tender offer, the company buys a fixed number of shares at a fixed price directly from shareholders on a record date. In an open market buyback, available again from 1 August 2026, the company buys shares on the exchange over time, with the offer opening within four working days of the public announcement and closing within sixty-six working days. Source: SEBI (Buy-back of Securities) Regulations, 2018, Regulations 4 and 17, read 22 September 2026.
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Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.