SEBI Sets ISIN-Level Freeze Framework for Promoter Holdings During Buy-Backs
The Securities and Exchange Board of India (SEBI) has operationalised the freezing of holdings of promoters, members of the promoter group and their associates at the ISIN level while a listed company's buy-back is under way. The change affects listed companies planning buy-backs, their promoters and the depositories that must enforce the freeze, along with the advisers who run buy-back transactions.
The rule comes from SEBI's circular dated 21 July 2026 on operationalising the freeze under Regulation 24(i)(ea) of the SEBI (Buy-back of Securities) Regulations, 2018. That clause was inserted by an amendment to the Buy-back Regulations notified on 1 July 2026. The circular requires depositories to put the operational framework and system enhancements in place by 1 August 2026.
What is frozen and for how long
| Point | Position under the circular |
|---|---|
| Holdings covered | Securities held by the promoter, promoter group and their associates |
| Level of freeze | ISIN of the security being bought back, not the whole demat account |
| Start | Date of the board resolution or shareholders' special resolution approving the buy-back |
| End | Closure of the buy-back offer |
| Carve-outs | Tendering in a tender-offer buy-back; invocation or release of an encumbrance created before the buy-back period, with the freeze continuing on the affected shares |
| Depository deadline | Framework and system changes in place by 1 August 2026 |
An ISIN-level freeze attaches only to the security identified by its International Securities Identification Number. Promoters often hold shares of several companies in the same demat account. The restriction stops movement of the buy-back company's shares without disabling unrelated holdings in that account.
Role of the depositories
SEBI has placed the operational work on the depositories. They must issue detailed guidelines on how the freeze will be implemented and prescribe the format in which listed companies submit freeze instructions for promoter holdings. The guidelines must also build in two controlled routes:
- Tender-offer buy-backs: promoters must be able to tender their shares, to the extent the buy-back terms allow, while other transfers remain blocked.
- Pre-existing encumbrances: a pledge or other encumbrance created before the buy-back began may be invoked or released, but the freeze continues to apply to the affected shares after that event.
Neither route is a general exemption. An invocation may move shares to a lender's account, and a release may restore them to an unencumbered state; in both cases the shares stay frozen until the offer closes.
Why this matters
Until now, compliance with the ban on promoter dealings during a buy-back depended largely on undertakings, disclosures and after-the-event monitoring. The circular turns that restriction into a control enforced by market infrastructure. A prohibited transfer should be stopped at the depository level instead of being found later, and there will be an electronic record of when the freeze was applied, which ISIN it covered and when it was lifted.
Because the freeze starts on the date the board or shareholders approve the buy-back, companies cannot leave the mapping of promoter holdings until the public announcement or the offer opening. The data must be ready on the approval date.
What listed companies and promoters should do
The inclusion of associates makes the exercise wider than copying names from the promoter category of the latest shareholding pattern. Before the board or shareholder meeting that may approve a buy-back, the company should:
- verify promoter and promoter-group records and identify associates covered by Regulation 24(i)(ea);
- collect current demat account details for each covered person, including joint holdings and accounts spread across depository participants;
- prepare an inventory of pledges and other encumbrances created before the buy-back period;
- fix responsibility for submitting the freeze instruction in the depository's prescribed format and keep the acceptance confirmation;
- brief promoters in advance, since standing broker instructions or planned off-market transfers will fail once the freeze applies.
During the offer, a promoter's tender or any action on an earlier encumbrance should go only through the route the depositories prescribe. At closure, the company should confirm the offer has formally closed, send the de-freeze instruction through the prescribed channel and keep the depository confirmations with the buy-back records.
Automation depends on accurate data. An incomplete list leaves holdings outside the freeze, and a wrong inclusion restricts someone who should not be covered. Companies need an escalation process for mismatches, and the depository freeze does not replace the promoter's and the company's own duty to comply with the Buy-back Regulations.
Updated on 27 September 2026: linked the SEBI circular of 21 July 2026, added the 1 July 2026 amendment date and the carve-outs in a table, and tightened the compliance steps.
