Blockbuster decision! Stock market set for a stir as SEBI approves share buybacks via the open market starting August 1. Amazing decision! There will be a stir in the stock market, SEBI has approved share buyback from the open market from August 1. – ..

A very big and positive news is coming for the investors and listed companies of the Indian stock market. In a big relief to the corporate world, the Securities and Exchange Board of India (SEBI) has given the official green signal to restart share buyback through the stock exchange i.e. open market. This new and historic rule of market regulator SEBI is going to be fully effective from 1st August. This major decision has been taken in this first board meeting of SEBI after the government rationalized the tax rules in the budget, which has now opened up another easy way for companies to utilize their surplus cash and give strong returns to investors.

Now the entire process will have to be completed within 66 days

According to the new guidelines of SEBI, now the time limit for this buyback from the open market has been limited. Companies will have to mandatorily conclude their entire buyback process within a maximum of 66 working days after making the announcement through electronic means. Not only this, while cracking down on the companies which announce buyback in the market only for show, SEBI has also made it clear that the companies will have to invest at least 40 percent of the total fixed buyback amount in the market within the first 33 working days.

Shares will be bought in normal trading without any separate window

The most important thing about this new decision is that now companies will not need any special or separate trading window to buy back their own shares from the open market. This entire process can be completed through the normal trading window like ordinary investors. Apart from this, SEBI has also made the requirement of appointing merchant bankers optional for the companies, which will drastically reduce the compliance cost and paperwork of the companies.

Restrictions on arbitrariness of promoters and strict arrangements for protection of investors

This time, SEBI has made very strict and strong rules to ensure complete protection of the interests of investors. Under the new rules, the stake of the promoter and his associates will be frozen at ISIN level during the entire period of buyback, that is, they will not be able to transfer, trade or pledge their shares during this period. Along with this, companies will not be able to do any buyback which violates the rule of their minimum public shareholding (minimum 25 percent public float) in the stock market. Under the new structure of capital gains tax, now 20% tax will be payable on short term capital gains and 12.5% ​​on long term, which will also be of great help to investors in their tax planning.