India’s securities regulator, SEBI, has operationalized a mechanism to freeze promoter shares during corporate buybacks, effective August 1.
The rule aims to prevent promoters from selling their stakes while the company is repurchasing shares from the market, ensuring that buybacks are not used to facilitate promoter exits or manipulate share prices.
The circular mandates compliance from listed companies, stock exchanges, depositories, merchant bankers, and registrars and share transfer agents.
These entities must now verify and enforce the freeze on promoter holdings for the duration of the buyback offer.
The move strengthens the regulatory framework around corporate actions, addressing concerns about potential conflicts of interest in capital return programs.
This development follows SEBI’s broader efforts to enhance market integrity and investor protection.