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Share Buyback Process in India: A Complete Investor Guide

By: Akriti Tomar | Date : Nov 4, 25

  1. What is a Buyback? A share buyback is a corporate action in which a company repurchases its shares from existing shareholders, reducing outstanding shares and potentially improving financial ratios. Buybacks are now generally conducted via the tender-offer / book-building route; the open-market route has been phased out by SEBI.
 
  1. Can I apply for buyback through the open market? No. SEBI has phased out buybacks through the stock-exchange (open-market) route with effect from 1 April 2025. Buybacks announced and opened before that date were allowed to continue under transitional provisions. After April 1, 2025, buybacks must use the tender-offer or book-building route. Click here to read SEBI 
 
  1. What happened to open market buybacks? Companies previously repurchased shares via exchange trading (“open market” route). SEBI has moved to phase out that route to improve transparency and investor protection; after 1 April 2025 the stock-exchange route is not available for new buybacks (transitional exceptions apply for offers opened earlier). 
 
  1. How does the tender-offer / book-building process work?
  • Company announces the buyback and fixes a record date.
  • Eligible shareholders receive a Letter of Offer / public announcement.
  • Tender-offer (standard): the buyback (tendering) period remains open for 5 working days; shareholders tender shares through their brokers or RTA. Accepted shares are debited, and funds credited to the shareholder’s bank account within 5 working days of closure of the offer. 
  • Book-building (price discovery): for frequently-traded securities a price range is disclosed and bids are collected; the buyback price is discovered from bids within that range and retail investors may have option to bid at the cut-off price. 
 
  1. Who is eligible to participate? Any shareholder whose shares are credited to their demat account as of the record date can participate. Pledged or unsettled (T1/T2) shares must be unpledged/settled to be tendered 
 
  1. What is the cooling period between buybacks? If a buyback is authorised by the board (i.e., an ‘offer of buyback’), the company generally cannot make another buyback offer within 1 year (365 days) from the closure of the preceding offer. This is a standard cooling-off requirement. 
 
  1. What are the documents and conditions to tender shares?
  • Shares must be held in Demats form (free / unpledged) to participate.
  • Tender via your broker’s corporate-action / tender application facility or via the registrar.
  • Unaccepted shares are returned to your Demat Account and funds for accepted shares are paid within the regulatory timeline. 
  1. Are block deals or negotiated deals permitted? No. Post-amendment, buybacks must follow the tender-offer / book-building processes prescribed by SEBI. Block deals, negotiated deals or private arrangements for buybacks are not permitted. 
 
  1. How are buyback prices determined?
  • Tender-offer (fixed price): the company may announce a fixed buyback price (disclosed in the Letter of Offer).
  • Book-building: a price range is published; bids are accepted and the buyback price is discovered from bids within the range. For frequently-traded securities the lower end of the price range is subject to minimums tied to closing/VWAP metrics. 
 
  1. What are entitlement and acceptance ratios? Each shareholder’s entitlement is determined by holdings on the record date. If the buyback is oversubscribed, acceptances are made proportionately across eligible shareholders as per the offer terms. 
 
  1. What are buyback lots / sizes? There is no fixed lot size shareholders can tender any quantity up to their demat holdings eligible for the buyback. Specific minimums (e.g., one share) depend on the Letter of Offer. 
 
  1. What is the maximum buyback size? A company’s buyback amount cannot exceed 25% of its paid-up capital and free reserves in a financial year. After buyback, the company’s debt-to-equity ratio (aggregate debt to paid-up capital and free reserves) must not exceed 2:1. 
 
  1. How are charges / fees handled for buyback? Brokers or registrars may levy a service or transaction charge for facilitating tendering (corporate action processing). Charges vary by broker — check with your broker for applicable fees
 
  1. How is settlement done? Funds for accepted shares are credited to your linked bank account within 5 working days of completion of the buyback tendering period. Unaccepted shares are returned to your demat account. 
 
  1. What happens if I tender excess shares? Only shares within your entitlement are guaranteed acceptance. Excess tenders are accepted proportionately (if oversubscribed); unaccepted excess shares are returned. 
 
  1. How are record dates and cut-offs decided? The company specifies a record date to identify eligible shareholders. Shares must be credited to your demat account before the record date to be eligible. The Letter of Offer will specify relevant cut-offs and dates
 
  1. What if I hold shares in physical form? Buybacks require dematerialised (Demat) holdings. Physical share certificates must be dematerialised before participating. 
 
  1. Where can I find buyback offers and details? SEBI, NSE and BSE list public buyback announcements; your broker’s corporate-actions portal and the company’s investor relations / registrar pages carry the Letter of Offer and details. 
 
  1. What if I have more questions or need help? Contact your broker’s helpdesk, the company’s registrar, or SEBI’s investor services for guidance. For tax questions, consult a qualified tax professional.
  Need Help? Contact RMoney at 0562-4266600 / 0562-7188900 or email askus@rmoneyindia.com

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