The Securities and Exchange Board of India (Sebi) on Thursday released a consultation paper on share buybacks, seeking changes concerning the limit, quantum, and the time taken to complete the process.

The market regulator has proposed to enhance the threshold for companies to buyback shares from their free reserves, reduce the cooling-off period between two buybacks under the tender route and shift the tax incidence fully to the share-tendering shareholders rather than the companies concerned.

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The buy-back regulations currently limit the size of any buy-backs to 25% of the paid-up capital and free reserves of the company through tender offer route. It is proposed that this limit be enhanced to 40%.

The proposals are part of a consultation paper floated by Sebi on Wednesday. Comments have been sought till December 1.

In the case of buybacks through the stock exchanges, the company should use 75% of the amount earmarked for the buyback, as per the consultation paper.

Currently, the limit is 50%. The company should ensure that at least 40% of the amount earmarked for the buyback is utilised within half of the duration specified as per the glide path. The buyback via stock exchanges can be done only in frequently traded shares.

Sebi has proposed to do away with the system of share buyback through open market transactions in a phased manner, with the option to close down this route from April 2025.

The company can’t buy more than 25% of its 10-day average daily trading volumes in one day and can’t participate in the first 30 minutes and last 30 minutes of the regular trading session.