Buyback of Shares Under Section 68: The Complete Practitioner Guide (2026)

A share buyback is one of the more procedurally intense corporate actions an Indian company can run — and post the 2024 buyback tax shift, the financial logic has changed enough that many CFOs are still figuring out whether to run them at all. For the CS in charge, the procedural rigour has not changed. This is the complete guide to running a Section 68 buyback in 2026 — eligibility, modes, financial limits, the tax overhaul, and the calendar from board resolution to extinguishment.

The regulatory frame

• Section 68 of the Companies Act + Rule 17 of the Share Capital and Debentures Rules — applies to both listed and unlisted.
• SEBI (Buyback of Securities) Regulations, 2018 — applies to listed companies. Tender, open-market via stock exchange, and odd-lot routes.
• Section 115QA / 10(34A) of the Income Tax Act — pre-October 2024, the company paid buyback tax (BBT); the shareholder received tax-free. Post-October 2024, this regime was reversed — the shareholder is now taxed on the buyback proceeds as deemed dividend. Major change to the calculus of choosing buyback over a special dividend.

Eligibility — the four bright lines

1. Authorisation by Articles. AoA must permit buyback. Frequently missed in older AoA; check first.
2. Quantum: Up to 25% of paid-up capital + free reserves in a financial year — under shareholder special resolution. Up to 10% under a board resolution alone (the “10/10” route).
3. Post-buyback debt-equity ≤ 2:1. Computed on the post-buyback figure. For some sectors (NBFC, housing finance), specific RBI ceilings apply differently.
4. No fresh buyback for 12 months after a previous one. (Listed: post-tender buyback specifically.)

Modes — listed company

• Tender offer. Highest acceptance ratio for retail shareholders; promoters can participate. Reservation for small shareholders (15%).
• Open-market via stock exchange. The company buys back through normal market trades. Promoters cannot participate. Increasingly disfavoured post-SEBI's 2023 amendments.
• Open-market via book-building. Process more akin to a reverse book-build. Used less commonly.
• Odd-lot route. Rarely used in post-dematerialisation era.

The calendar — listed tender buyback

1. Day 0: Board meeting. Resolution approving buyback. Public announcement within 2 working days.
2. Day +7: Notice of postal ballot / EGM dispatched (if special resolution route).
3. Day +30 to +40: Shareholder approval received.
4. Day +5 from special resolution: Draft letter of offer to SEBI.
5. SEBI observations: 21 working days unless extended.
6. Letter of offer dispatched to eligible shareholders.
7. Tendering period — 10 working days.
8. Acceptance: Determined post tendering, on a proportionate basis if oversubscribed (with reservation for small shareholders).
9. Payment to tendering shareholders within 7 working days of buyback closure.
10. Extinguishment of shares within 7 days of payment.
11. SH-11 / return of buyback to MCA within 30 days.
12. Capital Redemption Reserve created equal to nominal value of shares extinguished, out of profits.

The calendar — unlisted company

1. Board meeting + valuation report from a registered valuer.
2. Notice of EGM / postal ballot with the explanatory statement carrying full disclosure (necessity, max number, basis of price, source of funding, etc.).
3. Special resolution. MGT-14 within 30 days.
4. SH-8 (letter of offer) filed with ROC.
5. Letter of offer dispatched within 21 days of ROC filing.
6. Acceptance window — 15 to 30 days.
7. Payment within 7 days of close.
8. Extinguishment within 7 days of payment.
9. SH-11 + auditor's certificate within 30 days of completion.

What the 2024 tax overhaul actually changed

Pre-October 2024: the company paid BBT at 23.296% on the difference between buyback price and amount originally received by the company; shareholder received the amount tax-free.

Post-October 2024: shareholder receives the buyback proceeds and is taxed at their applicable income tax slab as deemed dividend; the company no longer pays BBT.

Effect: buybacks remain attractive for capital return to shareholders, but the relative attractiveness vs special dividend has shifted, and the optimal target audience (institutional vs retail vs promoter) has changed depending on slab rates. For unlisted companies returning capital to founder-shareholders, the calculus has reversed materially. CFO + tax advisor decision; CS executes either way.

The five mistakes we see on real buybacks

• Article authorisation not in place. An ad-hoc EGM ten days before adds a Section 14 amendment to the timeline.
• Debt-equity test computed on pre-buyback rather than post-buyback figures. Auditor catches in the SH-11 certificate; embarrassing rework.
• Calculation of free reserves errored. Includes a non-distributable reserve by mistake.
• Promoter dispensation under tender route missed. Promoters need to confirm participation in writing as part of the public announcement.
• Extinguishment certificate from the depositary not on file — needed for SH-11.

How Delta Filings supports buyback execution

The Delta Filings corporate actions module ships a Section 68 / SEBI Buyback Regulations calendar template — every event from board resolution to SH-11 with the dependencies and deadlines pre-mapped. Listing requirements, registrar/depositary handoffs, and disclosure timing are tracked alongside. For a CS running their first listed buyback, the playbook structure prevents the common procedural collisions.

The closing note

The mechanics of a buyback have not changed since 2018. The economics have changed dramatically. The CS who can execute the procedure cleanly is necessary; the CS who can also engage with the CFO on why buyback vs dividend post the 2024 tax shift is structurally more valuable. Read the Finance Act memorandum once; ask the CFO once; you will not regret either.