SEBI Takeover Code: Open Offer Obligations for Acquirers in India 2026

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, commonly known as the Takeover Code, is the primary regulation governing acquisitions of shares in listed companies in India. For any company or individual planning to acquire a significant stake in an Indian listed entity, understanding when an open offer obligation is triggered and how the pricing and process works is fundamental to deal structuring. The Takeover Code was amended in December 2025 with significant changes to the valuation process, and further reforms are expected in 2026 aimed at protecting retail investors and expediting transactions.

An open offer obligation under the Takeover Code is triggered in two primary situations. First, under Regulation 3(1), any acquirer who acquires shares or voting rights that take their aggregate holding to twenty-five percent or more of the voting rights in a target company must make an open offer to the public shareholders to acquire at least twenty-six percent of the total shares. Second, under Regulation 4, any acquirer who already holds twenty-five percent or more but less than the maximum permissible non-public shareholding can acquire additional shares up to five percent of the voting rights in any financial year without triggering an open offer, but acquisitions exceeding this creeping acquisition limit trigger a mandatory open offer. The open offer price is determined based on the highest of the negotiated price, the volume-weighted average market price for sixty trading days preceding the public announcement, and the highest price paid by the acquirer for shares of the target in the preceding twelve months, as specified under Regulation 8.

The December 2025 amendments to the Takeover Code introduced significant changes to the valuation process. Independent Registered Valuers now replace Merchant Bankers and Chartered Accountants with ten years of experience for conducting valuations under Regulation 9(5)(c) in cases of indirect acquisitions or non-cash consideration. SEBI has also empowered itself under Regulation 8(16) to order valuation through an independent valuer at the acquirer's cost. A nine-month transition period has been provided for ongoing valuation processes. Looking ahead, SEBI is evaluating reforms that would bar acquirers from offering higher prices or additional compensation to major shareholders compared to the open offer price available to retail investors, aiming to level the playing field. Potential changes to creeping acquisition norms under Regulation 4 are also under consideration.

Acquirers must plan their acquisition strategy with the Takeover Code obligations as a central consideration. The financial commitment of a mandatory open offer for twenty-six percent of shares can significantly affect deal economics and financing arrangements. Timelines are strict: the public announcement must be made within specified periods, and the open offer must be completed within prescribed deadlines. Failure to comply can result in SEBI enforcement action including monetary penalties and debarment from the securities market. Given the evolving regulatory environment, including proposed reforms aimed at equalising treatment between large and retail shareholders, acquirers should engage experienced legal counsel early in the deal process. Sansa Kanoon Pranali Partners advises acquirers, target companies, and merchant bankers on Takeover Code compliance, open offer structuring, SEBI filings, and strategic planning for listed company acquisitions.