SEBI to Enforce Promoter Holding Freeze from Aug. 1

The Securities and Exchange Board of India (SEBI) has introduced the operational framework for freezing promoter and promoter group holdings during share buybacks. Depositories have been instructed to establish the necessary systems by August 1.

The move follows SEBI's notification dated July 1, 2026, which amended the SEBI (Buy-back of Securities) Regulations. Under the revised rules, shares and other specified securities held by promoters, promoter groups, and their associates will be frozen at the ISIN level from the date a company's board of directors or shareholders approve a buyback until the offer closes. An ISIN-level freeze prevents promoters from transferring or otherwise dealing in securities of that particular ISIN across all their demat accounts.

The revised framework does not restrict promoters from tendering their shares in buybacks conducted through the tender offer route. It also permits the invocation of pre-existing encumbrances, including pledged shares, provided such encumbrances were created before the buyback period began. The ISIN-level freeze will remain in effect even after these encumbrances are invoked or released.

To facilitate implementation, SEBI has directed depositories to issue detailed operational guidelines and carry out the required system enhancements. The guidelines will outline the process for listed companies to initiate the freezing of promoter holdings, the operational procedures for enforcing the ISIN-level freeze, the mechanism for allowing promoters to tender shares in buybacks, and the procedures for handling the invocation or release of existing encumbrances.

Depositories have been instructed to complete the operational framework and necessary system upgrades before August 1. SEBI has also directed listed companies, recognised stock exchanges, depositories, merchant bankers, and registrars and share transfer agents to comply with the provisions of the circular. CA Sansaar