SEBI has operationalised a new mechanism to freeze promoter and promoter group holdings during share buybacks. Depositories are required to implement the necessary systems by August 1.
The change follows SEBI's July 1, 2026 notification that amends the Buy-back of Securities Regulations. Under the new rules, any shares held by promoters, promoter groups or their associates must be frozen at the ISIN level from the moment the board or shareholders approve a buyback until the offer closes.
The ISIN-level freeze stops promoters from transferring or dealing with the frozen securities in any of their demat accounts. However, it does not block promoters from tendering their shares in a buyback that uses the tender offer route.
The freeze also allows promoters to use existing encumbrances, such as pledged shares, that were created before the buyback period started. Even after an encumbrance is invoked or released, the freeze remains in place.
SEBI has asked depositories to issue detailed operational guidelines. These will cover how listed companies should request the freeze, the procedures for implementing it, how to allow tendering of shares, and how to manage pre‑existing encumbrances.
The guidelines will include the format for companies to submit the freeze request and the operational steps for the ISIN-level freeze. They will also explain how to handle the invocation or release of any pre‑existing encumbrances.
Depositories must finish the operational framework and system changes before August 1. All listed companies, recognised stock exchanges, depositories, merchant bankers, registrars and share transfer agents have been told to comply with the new rules.
The new rule aims to increase transparency and protect shareholders by ensuring promoter holdings are not used to influence buyback outcomes. It also aligns India’s market practices with international standards.