Open offers under SEBI's takeover regulations: triggers, price floor and timetable

Most guides to open offers stop at two numbers, 25% and 26%. This article goes one level down, into the text of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, in the consolidated version amended up to 5 December 2025. It sets out the triggers in the order the regulations list them, each parameter that sets the minimum offer price, and the deadlines, counted in working days, between the first announcement and the payment. The example is invented. It describes the process and takes no view on any open offer.

Left out on purpose: the exemptions from the obligation (including regulation 3(4) and regulations 10 and 11), delisting offers (regulation 5A), the full mechanics of competing offers, the extra rules for indirect acquisitions (including the regulation 8(5) valuation disclosure and the interest add-on in regulation 8(12)), the public-sector disinvestment carve-out from the market-price parameter, and the lower-tier rules for companies on the Innovators Growth Platform. Read the regulation text for any of these.

What an open offer is

An open offer is a public offer, made by someone who is buying a stake in or taking control of a listed company (the “target company”), to buy shares from the company’s other shareholders. It is made through a SEBI-registered merchant banker, called the “manager to the open offer”. The regulations call the person making it the “acquirer”. Taking part is the shareholder’s choice.

What triggers one

Trigger	What the regulations say	Regulation
Crossing 25%	An acquirer, together with persons acting in concert with them, may not acquire shares or voting rights that take their combined entitlement to 25% or more of the voting rights without first announcing an open offer.	3(1)
Creeping acquisition	Once holding 25% or more but less than the maximum permissible non-public shareholding, an acquirer may not add more than 5 percentage points of voting rights in a financial year (April to March) without an open offer. Only gross acquisitions count; a fall in holding from a sale or dilution does not reset the count.	3(2)
Individual crossing	A person whose own holding crosses these thresholds triggers the obligation even if the group’s combined holding does not change.	3(3)
Control	Acquiring control of the target company, directly or indirectly, needs an open offer even with no shares bought and below 25%. “Control” includes the right to appoint a majority of directors or to control management or policy decisions. A director or officer is not in control merely by holding that position.	4, 2(1)(e)
Indirect acquisition	Acquiring an entity that holds the target’s shares or control can trigger the same obligation.	5
Voluntary offer	A holder with 25% or more may choose to make an offer, provided the holding after the offer stays within the maximum permissible non-public shareholding.	6

Two points of reading. First, the 25% is of voting rights, not of share capital in the abstract. Second, “maximum permissible non-public shareholding” is a defined term in the regulations that links to the minimum public shareholding rule for listed companies. The text says the 5% creeping limit also cannot carry the holding past that ceiling.

How big the offer must be

For an offer made under regulation 3 or 4 (an indirect acquisition under regulation 5 is treated as one of these), the offer must cover at least 26% of the target’s total shares, measured as of the tenth working day after the tendering period closes (regulation 7(1)). For a voluntary offer the minimum is the number of shares that would give an additional 10% of voting rights (regulation 7(2)).

How the minimum offer price is set

Regulation 8 says the offer must be made at a price not lower than the price worked out under its formula. The formula is “the highest of” a list. For a direct acquisition, regulation 8(2) lists:

1. the highest negotiated price per share under the agreement that triggered the offer;
2. the volume-weighted average price the acquirer, or anyone acting in concert with them, paid or agreed to pay during the 52 weeks before the public announcement;
3. the highest price the acquirer or persons acting in concert paid or agreed to pay in the 26 weeks before the public announcement;
4. the volume-weighted average market price over the 60 trading days before the public announcement, on the exchange with the largest trading volume in those 60 days, if the shares are “frequently traded”;
5. if the shares are not frequently traded, a price determined by an independent registered valuer, using parameters such as book value and comparable trading multiples;
6. in certain indirect acquisitions, a per-share value computed under regulation 8(5).

“Frequently traded” has a numeric test in regulation 2(1)(j): traded turnover on any stock exchange in the twelve calendar months before the month in which the announcement is required must be at least 10% of the total shares of that class.

Further rules in regulation 8 adjust or extend the floor:

• Convertible instruments held by the acquirer that convert at a fixed price add that conversion price as a parameter (8(6)).
• “Price paid” includes any amount agreed in any form, including one labelled as control premium or non-compete fee (8(7)).
• If the acquirer buys during the offer period at more than the offer price, the offer price is revised up to that price. No purchases are allowed from three working days before the tendering period until it ends (8(8)).
• Parameters may be adjusted for corporate actions such as rights issues, bonus issues, splits and demergers, where the record date falls before three working days ahead of the tendering period start. A dividend is adjusted only where the dividend per share is more than 50% above the average of the three prior financial years (8(9)).
• If the acquirer buys above the offer price in the 26 weeks after the tendering period, it must pay the difference to those whose shares were accepted, within 60 days, with listed exceptions (8(10)).

For an indirect acquisition below the regulation 5(2) parameters, regulation 8(3) uses a similar list, with its look-back periods counted from the earlier of two dates: the date the primary acquisition is contracted and the date its intention is announced in the public domain.

An illustrative example (invented numbers)

Suppose a frequently traded company, “Example Ltd”, and an acquirer who agrees to buy a block of shares that crosses 25%. The numbers below are made up to show the “highest of” step. They are not from any real offer.

Parameter (regulation 8(2))	Illustrative value per share
(a) Highest negotiated price in the triggering agreement	Rs 500
(b) Acquirer’s 52-week volume-weighted average purchase price	Rs 470
(c) Acquirer’s highest purchase price in the 26 weeks before announcement	Rs 510
(d) 60-trading-day volume-weighted average market price	Rs 480

The highest is (c), so the floor in this example is Rs 510. The acquirer may offer more, and may revise the price upward until the start of the last working day before the tendering period begins (regulation 18(4)); the regulations set only the floor. Parameter (c) counts only the acquirer’s own purchases. A market price that moved above Rs 510 would not enter the formula unless it showed up in the 60-day average.

The timetable

All periods below are in SEBI working days, taken from the regulation text.

Step	Deadline in the regulations	Regulation
Public announcement (PA)	On the date of agreeing to the acquisition, or earlier for market purchases (before the order that crosses the threshold). Other cases, such as conversions and preferential issues, have their own rules.	13
Detailed public statement (DPS)	No later than 5 working days after the PA, published in a national English daily, a Hindi daily and regional-language dailies, and sent to the exchanges, SEBI and the target.	13(4), 14
Escrow account	Created no later than 2 working days before the DPS. Typically 25% of the consideration on the first Rs 500 crore plus 10% of the balance, with higher amounts for offers conditional on minimum acceptances.	17
Draft letter of offer filed with SEBI	Within 5 working days of the DPS.	16(1)
SEBI comments	Within 15 working days of receipt; silence counts as no comments. The period extends if SEBI seeks clarifications.	16(4)
Letter of offer dispatched	Within 7 working days of SEBI’s comments (or of the deadline lapsing). Holders as of the “identified date” receive it, but any shareholder may tender.	18(2)
Competing offers	A rival may announce an offer within 15 working days of the first DPS.	20(1)
Pre-tendering advertisement	One working day before the tendering period starts.	18(7)
Tendering period	Starts no later than 12 working days after SEBI’s comments; open for 10 working days. Shares tendered cannot be withdrawn during it.	18(8), 18(9)
Payment and completion	Within 10 working days of the last day of the tendering period. Delayed payment carries interest at 10% a year unless SEBI waives it.	18(10), 18(11A)
Post-offer advertisement	Within 5 working days after the offer period.	18(12)

For a worked count on the illustrative example: if the PA is made on day 0, the DPS is due by working day 5 and the draft letter of offer by working day 10 at the latest. If SEBI’s comments arrive on working day 25, the letter of offer is due by working day 32, the tendering period must start by working day 37, and it runs for 10 working days. These are outer limits taken from the text; an actual offer can move faster, and SEBI clarifications or approvals can stretch it.

Things the regulations do not do

The regulations set a floor, not a verdict. They do not say whether an offer price is fair to a shareholder, and nothing here predicts how a shareholder, the market or the target will respond to any offer. Whether an offer is made at all, at what price, and whether it succeeds, depend on the facts of each case, and returns from tendering or holding shares are not guaranteed.

Where to read a real one

For each live offer, the public announcement and detailed public statement are on the stock exchange and SEBI websites, and the draft and final letters of offer are on SEBI’s site. They list the price parameters used, so the table above can be checked against them. The wider map of filings is in the guide to company filings, and the other actions that change share counts and prices are in the corporate actions guide.