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SEBI’s Revised Open-Market Buy-Back Framework: A New Responsibility Architecture for Transaction Execution

The Securities and Exchange Board of India’s revised framework for buy-backs marks a structural change in the execution and compliance architecture applicable to listed companies. Alongside reintroducing open-market buy-backs through the stock-exchange route with effect from August 1, 2026, SEBI has made the appointment of a merchant banker discretionary for buy-backs. Where a company does not appoint a merchant banker, functions previously vested/performed by merchant bankers are distributed among the company, its compliance officer, statutory auditor, secretarial auditor and the stock exchanges.

The significance of the revised framework therefore extends beyond the return of the stock-exchange route. It introduces an alternative model of transaction accountability: the regulatory functions associated with a buy-back remain, but their performance no longer necessarily depends upon the a a single category of registered transaction intermediary.

 

Regulatory background to the revived stock-exchange route

SEBI’s reconsideration of open-market buy-backs through stock exchanges followed changes in both the regulatory and taxation context. The April 2026 consultation paper noted that the earlier concerns underlying discontinuation of the route included the inability to identify whether a shareholder’s trade had resulted in participation in the buy-back and the resulting tax-induced inequity among public shareholders.

In reconsidering the route, SEBI recorded that the revised taxation framework had addressed the earlier concern regarding differential tax treatment. The April consultation paper also noted that execution under an order-driven market mechanism is determined through price-time matching, giving public shareholders an equal opportunity to participate under uniform conditions. SEBI further identified continuous price discovery and liquidity as features of the stock-exchange route.

The SEBI Board subsequently approved reintroduction of the route from August 1, 2026. The approved framework requires completion of an open-market buy-back through the stock exchange within 66 working days from its opening, with at least 40% of the amount earmarked for the buy-back to be utilised during the first half of the buy-back period.

 

Merchant banker appointment becomes discretionary

The change in the role of merchant bankers emerged from SEBI’s broader review and rationalisation of the SEBI Buy-Back Regulations. Under the framework considered in the May 2026 consultation paper, merchant bankers were mandatorily appointed and performed functions including filing-related activities, dissemination, escrow-related compliance and oversight of regulatory compliance.

SEBI’s review proceeded on three stated considerations. First, it observed that the securities market ecosystem had evolved through continuous disclosure mechanisms and enhanced governance frameworks. Second, it noted that several functions performed by merchant bankers were procedural or operational and capable of being performed by the company or other market infrastructure institutions. Third, the Board of Directors remained responsible for matters including correctness of disclosures, statutory compliance, the declaration of solvency and extinguishment of securities.

The May consultation paper proposed dispensing with mandatory merchant banker appointment and reallocating existing functions. The SEBI-approved framework, however, framed the final position as one of discretionary appointment: a company may appoint a merchant banker, but where it elects not to do so, the functions otherwise undertaken by the merchant banker are allocated across the company, compliance officer, statutory auditor, secretarial auditor and stock exchanges.

This distinction is material. The framework does not dispense with the underlying compliance functions merely because no merchant banker is appointed. Instead, it changes the identity of the actor responsible for performing particular functions.

 

A distributed model of transaction responsibility

The May consultation paper provides the clearest regulatory background to the redistribution exercise. Its Annexure I mapped existing merchant banker functions against proposed alternative responsibility holders. The company was proposed to assume responsibility for filing the letter of offer and public announcement, payment of applicable fees and ensuring that the relevant disclosure documents were true, fair and adequate. The company was also proposed to assume responsibility for the final report, ensuring the availability of funds and firm financial arrangements for implementation of the buy-back, and compliance with the relevant provisions of the Companies Act, 2013.

Certification and assurance functions were separated from these issuer responsibilities. The consultation proposed assigning certification of compliance with the Buy-Back Regulations and the due diligence certification function to the secretarial auditor. The Board decision subsequently identified both the statutory auditor and secretarial auditor among the actors to whom responsibilities are allocated where a merchant banker is not appointed.

The execution-side architecture similarly moves away from reliance upon a single intermediary. Under the consultation proposal, oversight and operation of escrow arrangements, including specified functions concerning bank guarantees, cash deposits, approved securities, invocation and release, were proposed to be assigned to the designated stock exchange. Certification relating to adequacy of sell orders and volume-weighted average price was also proposed to be undertaken by stock exchanges.

The consultation paper proposed assigning the merchant banker’s presence during extinguishment or destruction of securities acquired through an open-market buy-back, and verification of compliance with extinguishment requirements, to the company’s compliance officer.

The regulatory design, therefore, is one of functional separation. Issuer-side filing and funding responsibilities, independent certification, market-infrastructure oversight and internal compliance functions are allocated to different actors already done with some success forrights issues..

 

Execution safeguards under the revived route

The revised framework also modifies the mechanics of open-market execution. The SEBI decision records that, given the changed taxation framework and the prohibition on promoter participation in open-market buy-backs, transactions under the stock-exchange route will be treated as normal trading transactions. Accordingly, the earlier requirements for a separate trading window and display of the company’s identity as purchaser on the trading screen have been dispensed with.

This represents a material difference from the April consultation paper, which had proposed reintroducing the route by applying the existing framework under the SEBI Buy-Back Regulations and circulars issued thereunder. That paper referred to the then-existing framework, including restrictions on volume, timing of bid placement and the permissible price range for orders. The final Board-approved position expressly removes the separate-window and purchaser-identity requirements; accordingly, the consultation proposal should not be treated as an exact statement of the final execution architecture.

Other safeguards operate around participation and execution. Promoters and their associates cannot participate in the open-market buy-back, and their shares or other specified securities are required to remain frozen at the ISIN level during the buy-back period. SEBI stated that this measure is intended to prevent inadvertent dealing during the buy-back period, which is sagacious in the day and age of wealth managers and portfolio managers.

The framework also requires proposed buy-backs to continue to comply with minimum public shareholding requirements.

 

Disclosure and shareholder communication

The framework retains public disclosure as a central component of the transaction while adding a direct shareholder communication requirement. The SEBI decision provides that information regarding open-market buy-backs must be disseminated to shareholders electronically, in addition to the public announcement already made through newspaper advertisements.

The redistribution of responsibility is particularly relevant here. The May consultation paper proposed that filing and public-announcement responsibilities previously associated with the merchant banker be performed by the company itself.

Optionality in merchant banker appointment does not remove the disclosure framework. Where no merchant banker is appointed, the architecture instead places issuer-facing disclosure responsibilities directly within the company-led compliance process, while retaining independent and infrastructure-level functions with other identified actors.

 

Implications for the transaction execution ecosystem

The revised framework changes the institutional structure of buy-back execution without eliminating the underlying regulatory controls. For merchant bankers, their role remains part of the transaction commercial structure.

For listed companies, proceeding without a merchant banker does not create a reduced-compliance route. Filing, funding, certification, escrow oversight, transaction execution, extinguishment and final reporting remain regulated functions, but responsibility for them is allocated across the issuer and specified assurance, compliance and market-infrastructure actors.

The principal regulatory significance of the amendment therefore lies in the movement from mandatory intermediary-led coordination to function-specific accountability. The revised model preserves the regulatory components of a buy-back transaction while allowing companies discretion over whether those components are coordinated through an appointed merchant banker or discharged through the alternative responsibility architecture established by the framework.

Authored by: Sourav Modi, Partner and Rashmita Das, Legal Researcher.

From Tech Hub to REIT Hub: How Bengaluru Came to Dominate India’s Office REIT Market

India’s Real Estate Investment Trust (REIT) market has undergone a remarkable transformation over the past few years. Introduced to deepen capital markets and provide investors with access to income-generating commercial real estate without the attendant costs of owning the property, REITs have evolved into an important asset class for all categories of investors.

Recent reports indicate that the combined operational assets held by listed REITs and Infrastructure Investment Trusts (InvITs) have crossed 195 million square feet, reflecting the increasing institutionalisation of India’s real estate and infrastructure sectors. REITs and InvITs are investment vehicles, similar to the traditional investment vehicles such as, mutual funds. However, here, they pool money from multiple investors to invest in income-generating real estate and infrastructure assets, respectively.

Equally noteworthy is Bengaluru’s emergence as the country’s dominant office REIT market, accounting for the largest share of REIT-owned office assets.

However, Bengaluru’s leadership is not the result of a single transaction or a recent market trend. Rather, it is the culmination of years of sustained office development, multinational corporate expansion, regulatory reforms, and growing institutional investment into real estate.

This article examines why Bengaluru has become India’s office REIT capital and what this means for the future of India’s commercial real estate and capital markets.

 

Understanding India’s REIT Framework

India formally introduced the REIT aligned with global investment trust structures in 2014. The objective was to create a regulated investment vehicle that would enable owners of income-generating commercial real estate to monetise mature assets thereby freeing up capital while providing investors with access to professionally managed real estate portfolios.

Unlike traditional real estate ownership, REITs invest primarily in completed and revenue-generating assets. The framework requires a significant proportion of assets to be operational(thereby mitigating construction risks), mandates periodic distributions to unitholders, and imposes governance, valuation and disclosure obligations designed to enhance transparency and investor confidence.

Since the listing of India’s first REIT in 2019, the market has expanded with REITs comprising premium office and retail assets across major metropolitan cities.

Today, India’s listed REIT ecosystem represents one of the country’s most successful examples of integrating commercial real estate with public capital markets.

 

Why Bengaluru Stands Out

Among India’s major commercial centres, Bengaluru has consistently demonstrated characteristics that make it particularly well suited for REIT ownership.

The city possesses the country’s largest inventory of institutional-grade office space, supported by large integrated business parks, modern infrastructure and sustained demand from multinational corporations.

Unlike markets that depend heavily on domestic occupiers, Bengaluru’s office sector is anchored by technology companies, Global Capability Centres (GCCs), research organisations and multinational enterprises that typically enter into long-term lease arrangements.

These long-duration leases generate stable rental income, precisely the type of predictable cash flow that REIT structures are designed to monetise.

As a result, Bengaluru naturally emerged as the preferred location for India’s earliest office REIT portfolios.

The Data Behind Bengaluru’s Share of the REIT Market

According to industry estimates, Bengaluru accounts for approximately 33% share of all leasing activity by foreign occupiers in Q1 of 2026, making it the country’s largest office market by completed institutional-quality inventory.

Recent market reports further indicate that:

  • Bengaluru accounts for approximately 24.7% YoY growth of India’s gross leasing;
  • Nearly 30% of the city’s Grade A office stock is already held within listed REITs, reflecting the highest REIT penetration among major Indian cities;
  • India’s listed REIT and InvIT assets now collectively exceed 195 million square feet; and
  • Bengaluru continues to contribute a significant share of annual office leasing activity.

 

These figures illustrate that Bengaluru is not merely participating in India’s REIT market, it is shaping it.

 

The GCC Advantage

Perhaps the single most significant factor behind Bengaluru’s REIT dominance is the continued expansion of GCC.

India has become one of the world’s preferred destinations for multinational companies establishing technology, engineering, finance, analytics and research centres. Bengaluru, the original ‘Silicon Valley’ in India and the hub of information technology, remains the preferred destination for many of these operations due to its skilled workforce, established technology ecosystem and mature office infrastructure.

Unlike traditional office occupiers, GCCs with their stable rental profile often enter into large-scale, long-tenure lease agreements.

For REIT investors, this translates into:

  • predictable rental income;
  • lower vacancy risk;
  • stable occupancy levels; and
  • greater visibility of future cash flows.

 

Consequently, the growth of GCCs has strengthened the investment case for Bengaluru’s office assets and enhanced their attractiveness for REIT ownership.

 

Institutional Developers Created REIT-Ready Assets

Another defining feature of Bengaluru’s commercial real estate market is the scale of institutional investment undertaken over the past two decades.

Developers such as the Embassy Group, Prestige Group, RMZ Corp, Brigade Group and Sattva Group pioneered large integrated office parks that were specifically designed for multinational occupiers.

These campuses typically offer:

  • Availability of sizeable floor plates
  • Multiple office towers;
  • Diversified tenant bases;
  • Integrated amenities;
  • Professional property management; and
  • High environmental and sustainability standards.

These characteristics allowed sponsors to avoid assembling fragmented portfolios, and instead focus on monetizing large, stabilised assets through public markets, creating attractive investment opportunities for institutional and retail investors alike.

 

Implications for India’s Capital Markets

The growth of Bengaluru’s office REIT ecosystem extends beyond commercial real estate. It represents a broader shift in how institutional capital participates in India’s economy.

For developers, REITs provide an efficient mechanism to recycle capital from mature assets into new developments.

For investors, they offer exposure to income-generating commercial real estate through regulated, exchange-listed investment vehicles without any of the attendant issues associated with owning real estate in India.

For capital markets, REITs diversify available investment products while broadening participation across domestic and foreign institutional investors.

The increasing maturity of India’s REIT market also reflects growing confidence in regulatory oversight, corporate governance standards and disclosure practices.

In many respects, Bengaluru has provided the most visible example of how commercial real estate can evolve from privately held assets into publicly traded investment products.

 

What Lies Ahead?

India’s office REIT market is still at a relatively early stage compared with more mature jurisdictions.

As institutional ownership of commercial real estate expands, several trends are likely to shape the next phase of growth.

These include:

  • continued expansion of GCC;
  • increasing institutional ownership of office assets;
  • additional REIT listings as developers monetise stabilised portfolios; and
  • greater investor participation in listed REITs.

 

While Hyderabad, Pune, Chennai and the National Capital Region continue to attract significant commercial real estate investment, Bengaluru appears well positioned to retain its leadership given its scale, depth of occupier demand and concentration of REIT-ready office assets.

 

Conclusion

Bengaluru’s dominance in India’s office REIT market reflects the convergence of several structural factors: decades of Grade A office development, sustained multinational demand, the rapid growth of GCC and a regulatory framework that enables mature commercial assets to access public capital markets.

As India’s REIT ecosystem continues to evolve, Bengaluru offers a compelling illustration of how regulatory reform, institutional investment and commercial real estate can work together to deepen capital markets.

For developers, investors and market participants alike, the city’s experience may well serve as a blueprint for the next phase of India’s REIT journey.

 

This blog is authored by our Joint Managing Partner – Vivek K Chandy and Partner – Arka Mookerjee.