SEBI’s buyback overhaul explained

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Hello, folks. You're tuned into Finshots Daily. In today's episode, we explain why SEBI is overhauling India's share buyback rules. But here's a quick side note from Team Ditto before we begin. This week, we're hosting a free two-day claims webinar series where we break down how claims are processed in the real world, why delays and rejections happen, and what truly makes a difference when it matters the most. By the way, it's completely free, and if you'd like to register while the seats last, you can do so by heading to the link in the description. Now, let's get on to today's story. Back in twenty eighteen, the SEBI was worried about buybacks. Now, that seems a little strange because buybacks seem very straightforward, right? Listed companies sit with extra cash, and they want to reward shareholders, so they offer to buy it back at a pre-decided price. But their worry wasn't about the textbook definition of share buybacks. They were more concerned about the companies announcing them, the ones that announce massive buybacks and create excitement around their stocks even before buying back a single share. Okay, but why would just announcing a buyback move stock prices? Well, it's because buybacks are one of the ways used to signal confidence. That is, if a company wants to spend its own cash buying back shares, then investors take it up as a sign that the company is doing very well and the board thinks the stock price is undervalued. It also tells investors that the company is sitting on a pile of cash it doesn't immediately need. That's exactly what worried SEBI, by