Issued by: Securities and Exchange Board of India (SEBI), Corporation Finance Department
Date of issuance: July 21, 2026 | Effective: Immediately, from date of issuance
On July 1, 2026, SEBI amended the SEBI (Buy-back of Securities) Regulations, 2018 to insert a new Regulation 24(i)(ea). The provision requires that shares or other specified securities held by a company's promoters and promoter group, including their associates, be frozen at the ISIN level for the duration of a buy-back process — from the moment the board or shareholders approve the buy-back until the offer closes.
A rule of this kind only works if the market infrastructure institutions that actually hold and move securities can enforce it. That is the gap this circular closes. Rather than leaving Depositories, exchanges, listed companies and intermediaries to interpret the freeze mechanism independently, SEBI has now directed the Depositories to build a common operational framework — covering how the freeze is triggered, how the two statutory carve-outs are handled, and how compliance is monitored across the ecosystem.
For CS professionals advising promoter groups on buy-backs, this circular is the practical bridge between the regulatory text notified on July 1 and how it will actually function in the depository system from August 1, 2026 onward.
The Freeze Requirement Under Regulation 24(i)(ea)
The circular confirms that promoter holdings — a defined term covering shares and other specified securities held by the promoter and promoter group, including associates — must remain frozen at the ISIN level. The freeze window runs from the date the board of directors (or shareholders, via special resolution, where required) approves the buy-back, and lasts until the buy-back offer formally closes.
- Tendering of shares or other specified securities into a buy-back conducted through the tender offer route
- Invocation of encumbrances that were created on the securities before the buy-back period began
Even where a pre-existing encumbrance is invoked or subsequently released during the buy-back window, the ISIN-level freeze continues to apply to those shares — invocation or release does not lift the freeze.
What SEBI Depositories Must Build for the ISIN-Level Freeze
The circular sets out five specific elements that the Depositories' operational framework must address:
- The format in which listed companies issue freeze instructions
- Operational modalities for implementing the ISIN-level freeze itself
- Modalities for permitting tendering of securities under the tender-offer route
- Modalities for permitting invocation or release of pre-existing encumbrances, while ensuring the freeze continues to apply on the affected shares
- Any other operational procedures or system requirements needed for effective implementation of Regulation 24(i)(ea)
Depositories must have the operational framework and all necessary system enhancements in place before August 01, 2026.
Who Must Comply with SEBI's ISIN-Level Freeze Circular
The circular places compliance obligations on a broad set of market participants: Listed Companies, Recognised Stock Exchanges, Depositories, Registered Merchant Bankers, Registrars to an Issue, and Share Transfer Agents (RTAs). Each is required to ensure compliance both with the circular itself and with the operational framework that the Depositories subsequently issue.
The circular is issued under Section 11(1) of the SEBI Act, 1992, read with Section 26(3) of the Depositories Act, 1996, in furtherance of SEBI's mandate to protect investors and regulate the securities market.
Promoter holdings — shares or other specified securities held by the promoter and promoter group, including their associates, as defined for the purposes of Regulation 24(i)(ea).
Regulation 24(i)(ea): Before vs After Comparison
SEBI Buy-back Promoter Freeze: Compliance Checklist
☑ Track board/special resolution dates for any upcoming buy-back — the freeze trigger point
☑ Coordinate with your Depository/RTA to confirm the freeze-instruction format once issued
☑ For tender-offer route buy-backs, confirm tendering workflows remain unaffected by the freeze
☑ Map any existing encumbrances on promoter holdings created before the buy-back period, and plan for invocation/release under the freeze
☑ Confirm with Depositories that the operational framework is live before August 01, 2026
☑ Update internal buy-back checklists/SOPs for Merchant Bankers and RTAs to reflect the ISIN-level freeze step
☑ Ensure the freeze is monitored through to the actual closing date of the buy-back offer
CorpLawUpdates Analysis
The substantive change here already happened on July 1, 2026, when Regulation 24(i)(ea) was inserted. What this circular does is far more consequential for day-to-day practice: it forces the Depositories to actually build the plumbing, on a fixed clock, before August 1, 2026. That is a short runway, and it puts the onus on listed companies and their advisors to have their internal processes ready in parallel rather than waiting for the depository framework to be published.
The most likely compliance friction point is the encumbrance carve-out. Permitting invocation of pre-existing encumbrances while insisting the freeze continues to apply on the resulting shares is operationally more complex than a simple freeze/unfreeze toggle — it effectively requires the depository systems to track encumbrance status and freeze status as two independent layers on the same ISIN. Practitioners advising promoters with pledged or encumbered holdings ahead of a buy-back should expect this to be an area depositories address carefully in their forthcoming operational guidelines.
Merchant Bankers and RTAs should also note that the compliance obligation is not confined to the listed company or the Depository — they are named participants who must independently ensure adherence to both the circular and the framework that follows. Buy-back due diligence checklists should be updated now rather than after the framework is published.
Given the tight August 1 deadline, expect a follow-up communiqué or operating circular from NSDL and CDSL individually, specifying the exact freeze-instruction format referenced in this circular. CorpLawUpdates will track and cover that once issued.
This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Verify with primary regulatory sources before acting.
