SEBI Board set for major reset: Open market buyback revival and easier MF norms on the cards

The market regulator is preparing a sweeping set of reforms for its June 19 meeting, targeting everything from share repurchases and AIF approvals to liquidity in the commodities segment.

The upcoming meeting of the SEBI board is shaping up to be a pivotal day for India’s capital market. After a series of consultations, the regulator is set to clear the decks for the open market buyback revival, a mechanism that was phased out in 2025 but is now being brought back to streamline how companies return surplus capital to shareholders.

The move marks a significant shift in stance. When the stock exchange route for buybacks was previously discontinued, the primary hurdle was a complex tax framework that created inequities between participating shareholders. With the Finance Act of 2026 having rationalized how capital gains are taxed, the regulator now sees a cleaner path forward. To prevent the price manipulation and “chance-based” participation that plagued the route earlier, the new framework includes tighter safeguards: a shorter 66-day execution window, a 40 percent minimum utilization mandate, and strict prohibitions on promoter activity during the buyback period.

Cutting the red tape

Beyond the buyback headlines, the board is looking at a significant operational overhaul. Fund houses stand to benefit from easier MF (mutual fund) borrowing rules, which are expected to grant managers more flexibility in handling cash management beyond just meeting investor redemptions. Simultaneously, the introduction of the ‘GARUDA’ mechanism—a green-channel approach for Alternative Investment Funds—aims to slash the launch time for new schemes to as little as 10 working days, or even immediate rollout for specific categories.

The agenda also touches on the retail investor experience, with proposals to simplify the transmission of securities to legal heirs by raising monetary thresholds. For companies, the easing of compliance is expected to go further, with potential waivers on the mandatory appointment of merchant bankers for certain processes, making the stock exchange route more cost-effective for firms.

Why it matters

This push reflects a wider regulatory philosophy: moving away from rigid, legacy compliance toward a faster, "green-channel" environment. By addressing the tax-related bottlenecks that previously throttled the open market route, the regulator is effectively acknowledging that companies in capital-light sectors need efficient ways to manage their return on equity.

However, the balance remains delicate. While the board is clearly favoring "ease of doing business," the stringency of the proposed safeguards—like freezing promoter shares during buybacks and stricter disclosure norms—shows that the regulator is unwilling to sacrifice market integrity for speed. Investors can expect a more agile market, but one that comes with a much tighter leash on potential price distortion.