(June 19): India’s securities regulator will reintroduce open-market buy-backs for companies, a move that could bolster shares prices as local equities have lagged global peers.
The Securities and Exchange Board of India (Sebi) had phased out direct repurchases by firms on stock exchanges in 2025 citing concerns over inequitable shareholder treatment and tax implications. The route was seen as benefitting only select investors.
The regulator has now imposed checks to prevent any misuse, according to Sebi whole-time member Kamlesh Chandra Varshney. It will also provide greater flexibility in share repurchases, reduce procedural complexity and strengthen investor protection, the regulator said in a statement on Friday.
The move may spur greater buy-back activity, particularly among cash-rich companies, while providing an additional source of demand for equities during periods of market volatility. The decision comes after investment bankers pushed for reinstating the route, saying it will help cushion selling pressure on stocks.
India’s benchmark Nifty 50 Index is down 8% this year, underperforming the MSCI Emerging Markets index, which is up 27%.
Sebi had earlier said new tax changes introduced by the government this year address concerns over inequitable treatment and “potential tax arbitrage” between buy-backs and dividend distribution.
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Returns from buy-backs are now taxed as capital gains rather than dividend income under rules that took effect on April 1. Companies including Wipro Ltd and Bajaj Auto Ltd have since announced repurchases through the tender-offer route, currently the only buy-back mechanism available.
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