What are the SEBI rules and regulations for share buyback?

SEBI market regulatory authority has put in place certain rules and regulations for companies who intend to repurchase their shares from existing shareholders.

SEBI is the key regulatory authority that has specified all buyback rules and regulations in the SEBI (Buyback of Securities) Regulations 2018. Recently, the buyback provisions and rules have been amended via SEBI (Buyback of securities) Amendment regulations 2023.

Here are the certain conditions imposed by SEBI while announcing share buyback;

• In an open market offer, a company cannot place bids in the pre-opening session (9:00 to 9:15 AM), or the first 30 minutes, and the last 30 minutes of a trading day.
• A company cannot buy back more than 25% of its daily average trading volume of its last 10 trading days preceding the repurchase day.
• A company can repurchase shares at any price within 1% of either side of the previous trading session’s price.
• It is mandatory for companies to utilize 75% of the proceeds of buyback through the stock exchange route, which was earlier 50%.
• A company cannot repurchase its shares from odd lot holders.
• From 1^st April 2025, no company will be permitted to announce share buyback through the open market via stock exchange. Thus, a tender offer will be the only permitted route to repurchase shares from shareholders.
• For FY 22-23, companies are allowed to buy back 15% of their paid-up capital and free reserves via open market buyback through a stock exchange. For FY 23-24, the maximum buyback limit permitted is 10% and the same is 5% for FY 24-25.
• For all share buyback via a tender offer, a company can revise the buyback price even one day prior to the buyback record date.