SEBI’s June 19, 2026 board approval reintroduces open-market buybacks through stock exchanges from August 1, 2026, permits completion through a compressed 66-working-day framework, and makes the merchant banker appointment discretionary. This is a significant change from the earlier framework, where appointing a merchant banker was mandatory and much of the execution process and regulatory responsibility sat with that intermediary. However, this change under the SEBI framework does not alter the company’s obligations under corporate law. The key requirements under Section 68 of the Companies Act, 2013 remain exactly the same. This includes the 10% board approval limit and the 25% shareholder approval limit for buybacks based on paid-up capital and free reserves, the maximum debt-equity ratio of 2:1, and the directors’ responsibility for the declaration of solvency. Boards will initially welcome the change because it appears to reduce transaction cost, simplify execution and return control to the issuer. The real change, however, goes far beyond procedural convenience. When the merchant banker steps away, responsibility shifts directly to the company, its compliance team, auditors, and ultimately the board.
The Cost Saving Appears Before the Liability Transfer
The problem usually first appears in a board paper as a saved-fee line item. The management team sees efficiency, the board sees disciplined capital allocation, and the compliance team sees responsibilities returning in-house without the support structure that previously existed. That difference matters because the board resolution is not only an approval to repurchase shares. It is also the moment the company takes direct responsibility for how the buyback is executed.
It’s a recurring pattern where an intermediary is often viewed as an avoidable cost until the first real market challenge appears. The answer is not adding bureaucracy, but to map the duties that the merchant banker would have absorbed like, execution supervision, disclosure sequencing, broker instruction, depository coordination and contemporaneous evidence.
The Promoter Lock Rarely Stays Inside the Buyback
Companies often view the promoter ISIN freeze simply as an insider-trading safeguard. Promoter groups experience it differently. What appears straightforward from a compliance perspective can quickly become a financing issue when pledged shares, collateral top-ups, loan renewals or group credit facilities are moving in parallel.
This is where a buyback stops being only a capital-return action. Lenders later ask whether encumbrance arrangements were pre-cleared. Acquirers ask whether promoter financing was disrupted. Diligence teams later ask whether the listed company fully understood its wider financing and group arrangements before launching the buyback. The structural response is promoter coordination before the board meeting, not after a depository rejection. Counsels specialising in capital markets add value here through sequencing: identifying which private financing pipelines must be cleared, paused, refinanced or documented before the public transaction begins.
The Compliance Burden Is Not Where Most Boards Expect
The challenge is managing the statutory filings. The bigger issue is that responsibility for the buyback now sits much more directly with the company and its board. Under the earlier framework, the merchant banker’s formal sign-off gave boards an additional layer of review before the buyback moved ahead. Under the new framework, companies must deploy 40% of the earmarked funds within the first half of the 66-working-day period.
A delay caused by market conditions can therefore quickly become a compliance issue. When these responsibilities move in-house without clear internal processes, companies often end up relying too heavily on executing brokers, even though the legal responsibility continues to rest with the company. The solution requires formalising internal transaction-controls such as volume and price limits, pre-approved disclosure templates, and a buyback committee authorised by the board to make timely decisions before the trading window closes.
The Record Built During Execution Shapes Every Review Afterwards
During execution, companies often think they are building a compliance file: board minutes, exchange uploads, auditor confirmations and broker reports. External reviewers read the same file differently. Regulators examine whether trades are supported or market prices are distorted. Auditors examine whether numbers were verified in time, not merely later. Lenders examine whether promoter restrictions affected collateral. Potential acquirers assess whether the transaction reflects careful governance or reactive decision-making.
These issues are usually discovered later, when regulators, auditors, or due diligence teams review execution pauses, unusual price movements, or promoter actions that were not properly planned or documented. A standard board minute referring to ‘market volatility’ is not enough as it does not explain why the board made a particular decision or how that decision was reached. Regulators, auditors, and other reviewers will look for much more specific information like what market data did the board consider, which advisors were consulted and what risks they identified, what other options the board considered before making its decision, and why the board chose that approach, how it protected shareholder value, and how it complied with the legal requirements.
The answer is disciplined documentation. Each meaningful execution decision should leave a record of business judgment, market data, legal risk and board oversight. A strong record is not created at the end of the buyback process. It is built day by day throughout execution.
The Companies That Navigate This Well Change More Than Their Buyback Process
The companies that adapt well to this regime do more than simply execute smoother buybacks. They change how capital actions are governed. The board stops assuming that removing an intermediary also removes the underlying responsibility. Promoter financing and shareholding arrangements become part of the planning process from the beginning. General counsel integrates capital markets timing with financing, pledge, disclosure and diligence considerations. Compliance teams are given the processes and support needed to handle the responsibility they are carrying.
That shift in how the company approaches governance is the real lesson. The buyback is only the visible event.The deeper change is that listed companies now need to apply the same discipline that an external intermediary previously provided: sequencing, verification, escalation, market evidence and independent challenge.
When regulators remove an institutional intermediary, they rarely remove the work. It simply moves somewhere else within the organisation. For boards, the question is no longer whether open-market buybacks can be executed without a merchant banker. The real question is whether the company understands all the other consequences that follow once the merchant banker is no longer part of the process.
COMMERCIAL LAW BLOG 
Leave a comment