The Securities and Exchange Board of India (SEBI) is enhancing transparency in corporate buybacks. Under the latest regulatory shift, depositories are now mandated to freeze promoter holdings effectively from the moment a board approves a buyback until the offer period concludes.
This policy adjustment aims to prevent market manipulation and ensure fair play for retail shareholders. By restricting promoter activities during these specific timeframes, the regulator seeks to curb potential conflicts of interest while maintaining market integrity.
Despite the freeze, the rules offer specific exceptions. Promoters remain eligible to participate in buybacks via the tender offer process. Additionally, the mandate clarifies that existing pledges established prior to the buyback announcement can still be invoked without violating the new restrictions.
Market participants and depository institutions have been given a clear timeline to comply with these operational requirements. SEBI has set an implementation deadline of August 1 for all technical and systemic adjustments to be fully functional.
