Summary of this article
Sebi board clears bringing back open market buyback options
GARUDA mechanism for AlFs also cleared for fast-tracking
The Securities and Exchange Board of India (Sebi) on June 19 announced a series of reforms aimed at making India's capital markets more efficient, reducing paperwork, and improving investor protection. The decisions were taken at the regulator's board meeting in Mumbai and cover areas such as share buybacks, mutual funds, alternative investment funds (AIFs), municipal bonds, and the transfer of securities after an investor's death.
Open Market Buybacks
One of the biggest announcements was the return of open-market share buybacks through stock exchanges from August 1, 2026. This gives listed companies another option to buy back their shares, apart from the existing tender offer and book-building routes. The move comes after changes in the tax rules for buybacks.
Sebi said companies using this route must complete the buyback within 66 working days. They will also have to spend at least 40 per cent of the total buyback amount during the first half of the programme. The regulator has made it optional for companies to appoint a merchant banker, which is expected to reduce costs. At the same time, promoters and their associates will not be allowed to trade in the company's shares during the buyback period, helping protect investors.
The board also allowed mutual funds to take intraday borrowings to manage temporary cash shortfalls caused by settlement timings, foreign exchange transactions, and derivative payments. These borrowings can only be used for short-term liquidity needs and must be repaid by the end of the day. Sebi has made it clear that the facility cannot be used to increase leverage or take extra investment risks.
GARUDA for AIFs
Another important decision was the launch of the GARUDA mechanism for AlFs. The new system will help AIFs launch investment schemes much faster. Regular AIF schemes can now be launched within 10 working days, while schemes meant only for accredited investors and angel funds can begin immediately after registration or filing the required documents. The move is expected to speed up the flow of capital into businesses and startups.
Sebi has also simplified the process for transferring shares and securities to legal heirs after an investor's death. It introduced a fast-track process for small-value claims and increased the limit for claims that can be settled with simpler documentation. The regulator has also removed the need to submit PAN details in many cases and done away with the mandatory requirement of probate of a will, making the process easier for families.
To encourage the development of India's debt market, Sebi approved changes that will allow municipalities to raise bonds to refinance existing project loans. It also introduced measures to attract more retail investors by allowing lower investment sizes and investor incentives. The regulator also aligned rules for listed securitised debt with the Reserve Bank of India’s (RBI) framework to make the market more efficient.
Besides these, the board approved the transfer of the Social Stock Exchange's Capacity Building Fund to a new Section 8 company. The board also selected the SME capital-raising framework for a detailed review during FY27, and cleared a new code of conduct for Sebi board members to strengthen governance and improve transparency.
