The Supreme Court dismissed SEBI’s appeals and upheld SAT’s interpretation that Regulation 10 of the SEBI (SAST) Regulations applies to combined shareholding of acquirer and promoter/acting in concert (PAC), clarifying the scope of open offer triggers.
SC Affirms Combined Holding Rule Under SAST Regulations
The Supreme Court, dismissing appeals by SEBI, upheld the Securities Appellate Tribunal’s interpretation that Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 applies to the aggregated shareholding of an acquirer and any promoter or person acting in concert (PAC). The ruling clarifies that open offer obligations arise when combined holdings cross thresholds such as 25% of voting rights or 15% change in control, even if each entity holds below the limit individually.
The Court affirmed SAT’s jurisdiction under Section 15T of the SEBI Act, 1992, to interpret regulatory provisions and enforce compliance. It emphasized that the SAST framework is designed to ensure market transparency and protect minority shareholders from stealthy accumulation of control. The judgment also reaffirmed that 'acting in concert' must be determined based on factual matrix and not merely from directorial overlap or equity linkage.
This decision reinforces the obligation of acquirers to conduct thorough due diligence on affiliated entities and PAC structures before acquisition. For corporate lawyers advising on M&A transactions, it underscores the need for precise disclosure and proactive assessment of creeping acquisitions. Regulatory exposure under SAST now extends beyond legal ownership to economic control and coordination.
Citations
- SEBI Act, 1992, Section 15T; SEBI (SAST) Regulations, 2011, Regulation 10
