SEBI Orders ISIN-Level Freeze For Promoter Holdings By August 1

The Securities and Exchange Board of India (SEBI) has ordered depositories to implement an ISIN-level freeze framework for promoter and promoter group holdings by August 1. This move is aimed at preventing promoters from transferring or selling their shares during a buyback period.

SEBI issued a circular on Tuesday, directing depositories to put in place the operational framework and required system upgrades to facilitate the implementation of the ISIN-level freeze mechanism. The framework will specify the operational procedures for allowing promoters to tender shares in buybacks conducted through the tender offer route.

The regulator also clarified that even in cases where encumbrances are invoked or released, the freeze will continue to apply to the affected shares or other specified securities. The depositories have been asked to ensure that the operational framework and the necessary system enhancements are put in place before August 1, 2026.

This directive follows SEBI's notification issued on July 1, 2026, amending the SEBI (Buy-back of Securities) Regulations, 2018. Under the amended regulations, promoter and promoter group holdings will remain frozen at the ISIN level from the date the board of directors or shareholders approve the buyback proposal until the closure of the buyback offer.

There are two exceptions to the freeze. Promoters will be permitted to tender their shares in buybacks carried out through the tender offer route, while encumbrances created before the commencement of the buyback period may be invoked or released, subject to the condition that the freeze continues to remain applicable to the invoked or released shares.

The introduction of the ISIN-level freeze mechanism is expected to increase transparency and prevent promoters from taking advantage of the buyback process. It will also help to maintain a level playing field for all investors.

SEBI has been taking several steps to strengthen the regulatory framework and protect the interests of investors. The implementation of the ISIN-level freeze framework is another step in this direction.

The depositories will have to issue detailed operational guidelines covering the implementation of the ISIN-level freeze, including the format to be used by listed companies while issuing instructions for freezing promoter holdings. They will also have to outline the process for the invocation or release of encumbrances created before the commencement of the buyback period.

The move is expected to have a positive impact on the capital markets, as it will help to increase transparency and prevent promoters from taking advantage of the buyback process. It will also help to maintain a level playing field for all investors.

In conclusion, the introduction of the ISIN-level freeze mechanism is a significant step taken by SEBI to strengthen the regulatory framework and protect the interests of investors. It is expected to have a positive impact on the capital markets and will help to increase transparency and prevent promoters from taking advantage of the buyback process.