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SEBI’s September 2026 Meeting: Opening New Routes for Capital and Participation

The September 2026 meeting of the Securities and Exchange Board of India comes at a time when India’s capital markets are expanding not only in scale, but also in the range of instruments through which capital is being raised and deployed. The first few months of FY2026-27 alone saw REITs and InvITs mobilise INR 10,844 crore including INR 6,005 crore through REITs and INR 4,839 crore through InvITs and INR 2,62,142 crores through equity issuances, according to September 2026 Bulletin by SEBI. That level of activity makes the question of how these vehicles can access a wider investor base in an efficient manner, increasingly relevant.

Against this backdrop, three decisions taken at SEBI’s 24 September 2026 Board meeting stand out. The significance is particularly evident in the case of REITs and InvITs, where the decision potentially creates a new bridge between India’s listed real-asset platforms and overseas pools of capital.

 

REITs and InvITs Look Beyond the Domestic Unit Market

SEBI has approved a framework enabling depository receipts (DRs) to be issued against units of REITs and publicly listed InvITs. The proposal had been put out for consultation in August 2026, following which the Board approved amendments to provide the enabling framework. The detailed operational framework is to follow separately.

This is more than a change in instrument nomenclature. A DR structure can allow an overseas investor to obtain exposure to an underlying Indian security through a security issued and traded in another market. For REITs and InvITs, that creates an additional channel for accessing foreign capital without requiring the overseas investor to participate directly in the Indian unit market in the same manner as an onshore investor.

The importance of this distinction lies in market access. India’s REIT and InvIT frameworks have already created listed vehicles through which investors can obtain exposure to income-generating real estate and infrastructure assets. The DRs route potentially extends that investment proposition to investors who may be more accustomed to accessing securities through international or IFSC-based market infrastructure. Given the push for monetization of certain classes of assets which have offshore presence, such as ships and petroleum infrastructure, this move may allow these assets to be pooled and monetized through the InvIT route more efficiently and to a wider audience.

We already witness, how Singapore’s regulatory and exchange infrastructure demonstrates that depository receipts can be used to connect securities markets without eliminating the regulatory framework applicable to the underlying securities. SGX’s rules, for example, recognise global depository receipts as a distinct listed instrument and require the underlying securities to remain subject to the rules of their home exchange. Its framework also requires the depository to be a supervised financial institution with appropriate expertise.

For Indian REITs and InvITs, the practical question now shifts from whether foreign investors can obtain exposure to whether the DRs structure can make that exposure sufficiently efficient and familiar to attract meaningful overseas participation.

 

PMS Moves From a Narrower Mandate to a Broader Investment Platform

The second major development is the comprehensive review of the PMS framework. SEBI’s July 2026 consultation paper had proposed a substantial reconsideration of the investment universe and operating framework for portfolio managers.

SEBI’s decision now moves the framework further towards a model in which PMS can serve investors across a broader range of market opportunities. Some of the key changes approved include permitting portfolio managers to participate in IPOs and primary-market debt issuances, and providing greater flexibility in asset classes especially overseas securities and specified unlisted debt, subject to the applicable conditions. SEBI has also approved a dedicated route for portfolio management services focused on investment in mutual funds, with a minimum investment threshold of INR 25 lakh.

This matters because PMS has historically occupied a distinct space between standardised pooled investment products and fully bespoke investment management. SEBI has clearly recognized that the Indian investment services market is expanding with a wider range of investors needing access to boutique investment services and not simply pooled investment schemes. Expanding its permissible investment universe changes the proposition from simply how a portfolio is managed to, more fundamentally, what opportunities the portfolio manager can access on behalf of the client, which is also a recognition that Indian investors are broadly looking to tap into niche growth sectors offered by international markets, beyond the more generalized mutual fund schemes.

The inclusion of IPOs and primary debt is particularly relevant. It brings PMS closer to the primary-market ecosystem, potentially allowing portfolio managers to consider securities at the point of issuance rather than restricting portfolio construction primarily to instruments already available in the secondary market. This will make PMS an important part of the non-institutional investors category in the coming days and may also have a potential effect of reducing reliance on borrowing for investment in IPOs. Further, independent fund managers, who can utilize the services framework of a registered portfolio manager will help clarify the structures market intermediaries can utilize to assist investors.

The overseas investment component is equally significant in the context of wealth management. It reflects the growing reality that sophisticated Indian investors increasingly view portfolio construction through a cross-border lens. At the same time, SEBI’s approach remains conditional rather than unrestricted, reinforcing the principle that greater investment flexibility must operate within defined regulatory parameters.

The INR 25 lakh PRIM route is perhaps the clearest indication that SEBI is attempting to create segmented regulatory architecture rather than a one-size-fits-all PMS model. Instead of treating all PMS activity identically, the framework recognises a distinct category for investors seeking professional management focused on mutual-fund investments.

 

FPIs Enter a Deeper Commodity-Market Role

The third decision extends institutional participation in India’s commodity markets. SEBI has approved a framework permitting FPIs to participate in physically settled, non-agricultural commodity derivative contracts, subject to the prescribed framework and safeguards. The proposal had been considered through SEBI’s August 2026 consultation on FPI participation in exchange-traded commodity derivatives.

The significance is not simply that another class of investors will be permitted into another asset class. Commodity derivatives perform important price-discovery and risk-management functions, and greater institutional participation can potentially broaden the range of market participants contributing to those functions.

 

Making Indian Markets More Accessible

Viewed separately, the three measures address REITs and InvITs, portfolio management and commodities. Viewed together, they suggest a broader shift in India’s securities-market architecture.

The REIT/InvIT decision creates a potential cross-border capital-raising channel. The PMS overhaul expands the investment universe available to professionally managed portfolios. The FPI decision broadens institutional participation in commodity derivatives.

What connects them is not deregulation for its own sake. It is the attempt to make India’s market infrastructure more compatible with the ways in which sophisticated domestic and international capital is already deployed globally.

The decisions taken in 24 September meeting is an evolution of India’s capital-market architecture. The direction is increasingly clear: rather than creating isolated products for isolated investor categories, regulation is beginning to focus on building more connected routes between Indian securities, global capital and institutional investment strategies.

The real measure of these reforms will therefore be whether the additional routes created on paper translate into deeper participation, more efficient capital formation and greater choice without compromising the safeguards on which market confidence ultimately depends. The effectiveness of the REIT/InvIT, DRS framework will depend substantially on the detailed rules governing issuance, eligible jurisdictions, disclosure, settlement and investor participation.

 

Authors: Pracheta Bhattacharya

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.