SEBI SAST regulations require open offers upon acquisition of 25% voting rights, creeping acquisition beyond 5%, or change in control, with strict pricing and disclosure norms.
SEBI SAST Open Offer Triggers Explained
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, mandate open offers in three primary scenarios: acquisition of 25% or more voting rights, creeping acquisition exceeding 5% in a financial year beyond a 25% base, and acquisition of control—directly or indirectly. These triggers ensure minority shareholder protection during shifts in ownership.
The offer size varies: 26% for 25% threshold breaches, while creeping acquisitions require offers for at least 10% of equity. Pricing is based on the volume-weighted average price across the preceding 26 weeks. Exemptions exist for certain block trades, inheritance, and reconstructions approved by courts.
Practitioners advising on mergers, private equity investments, or share acquisitions must conduct pre-deal SAST due diligence. Recent regulatory scrutiny emphasizes strict compliance with disclosure timelines and fairness in pricing. Legal teams should also assess indirect control through PACs (Persons Acting in Concert) and SPVs in structuring acquisitions to avoid inadvertent triggers.
Citations
- SEBI (SAST) Regulations, 2011
