SEBI SAST Open Offer Triggers: 25%, Creeping Acquisition and Control

Substantial Acquisition of Shares and Takeovers Regulations, 2011: When Must an Acquirer Make an Open Offer?

Summary: Acquisitions involving listed companies require careful examination under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations”), because an open offer obligation can arise from changes in voting rights or control and is not confined to a straightforward purchase of shares. This article explains the three principal open-offer triggers. Under Regulation 3(1), an acquisition resulting in an acquirer together with persons acting in concert (PACs) holding 25% or more voting rights requires examination of the open offer provisions. Regulation 3(2) governs creeping acquisitions where an acquirer and PACs already hold 25% or more but remain below the maximum permissible non-public shareholding, generally permitting acquisition of up to an additional 5% voting rights in a financial year subject to applicable requirements. Regulation 4 separately addresses acquisition of control, meaning that an open offer may be triggered even without crossing the 25% threshold where contractual, management, board, veto or other rights amount to control. The article also explains aggregation of holdings of PACs and the distinction between direct and indirect acquisitions under Regulation 5. The Adani–NDTV transaction is discussed as an illustration of how acquisition through an intermediate holding structure can attract the takeover framework. A practical example demonstrates the step-by-step examination of aggregate voting rights, applicable thresholds and possible exemptions under the SAST Regulations.

Introduction

Acquiring shares in a listed company is not always a simple commercial transaction. Where an acquisition crosses certain specified thresholds, or results in acquisition of control, the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (“SAST Regulations”) may require the acquirer to make an open offer to the public shareholders of that company.

Before proceeding with any proposed acquisition in a listed company, it is important to first understand the circumstances that can trigger this open offer obligation. This article explains the three key triggers, the role played by “persons acting in concert,” and the difference between direct and indirect acquisitions — all in simple, practical terms.

What is an Open Offer?

An open offer is a mandatory offer made by an acquirer to the public shareholders of a listed target company, giving them an opportunity to tender their shares once the relevant provisions of the SAST Regulations are triggered. The idea behind this framework is straightforward: whenever there is a substantial change in the ownership, voting rights, or control of a listed company, the public shareholders should have a fair opportunity to exit at a fair price, rather than being left behind while a new set of owners takes charge.

The Three Key Open-Offer Triggers

A. Acquisition of 25% or More — Regulation 3(1)

Where an acquirer, together with persons acting in concert (PACs), acquires shares or voting rights that entitle them to exercise 25% or more of the voting rights in a target company, the open offer obligation needs to be examined.

Example:

Existing holding of Investor A: 18% Proposed acquisition: 8% Post-acquisition holding: 26%. Since the aggregate holding reaches 26%, the 25% threshold under Regulation 3(1) is crossed, and the open offer requirement needs to be examined.

B. Creeping Acquisition — Regulation 3(2)

An acquirer who, together with PACs, already holds 25% or more (but less than the maximum permissible non-public shareholding) is generally permitted to acquire up to an additional 5% of voting rights in a financial year without triggering an open offer, subject to the applicable regulatory requirements.

Example 1:

Existing holding: 30% Acquisition during the financial year: 4% Closing holding: 34%

This acquisition is generally within the 5% annual creeping acquisition limit.

Example 2:

Existing holding: 30% Acquisition during the financial year: 6% Closing holding: 36%

Here, the acquisition exceeds the annual limit, and the open offer obligation needs to be examined.

It is worth noting that this calculation is not a simple matter of multiplying 5% by the number of shares outstanding. The relevant voting rights and the acquisitions made during the financial year must be carefully examined, since gross acquisitions (not net of any disposals) are generally what count towards this limit.

C. Acquisition of Control — Regulation 4

Acquisition of control is an independent trigger, separate from shareholding percentages. An open offer obligation may arise even where the acquirer does not cross the 25% threshold at all, if the transaction results in acquisition of control over the target company.

Relevant arrangements that may point towards acquisition of control include:

Board control Management rights Shareholder agreements Veto rights Affirmative rights Other contractual arrangements Arrangements involving persons acting in concert.

For example, an investor holding only 15% of a company’s shares may still need to examine Regulation 4 if contractual arrangements give that investor control over the management or policy decisions of the target company. Shareholding percentage alone, therefore, does not tell the whole story.

Persons Acting in Concert — Why They Matter.

An acquirer cannot necessarily avoid a takeover threshold simply by splitting acquisitions between different entities or individuals. Where persons qualify as “persons acting in concert,” their relevant holdings and acquisitions need to be considered together, as a single block.

Example:

Investor A: 15% Investor B: 12%

If A and B qualify as PACs, their aggregate holding of 27% may be relevant for determining whether the open offer obligation is triggered — even though neither investor individually crosses the 25% threshold.

For this reason, identifying who qualifies as a PAC is an important part of takeover and transaction due diligence, and is often one of the first questions to be examined in any acquisition involving multiple investors.

Direct and Indirect Acquisition.

The SAST analysis is not limited to a direct purchase of shares in the listed target company.

Direct acquisition: The buyer directly acquires shares or voting rights in the listed target company.

Indirect acquisition: The buyer acquires another entity that itself holds shares or control in the listed target company, which brings Regulation 5 into consideration.

This can be illustrated as follows:

Investor acquires a Holding Company, which in turn owns the Listed Target Company.

Even though the investor has not directly touched a single share of the listed target company, the acquisition of the holding company may still trigger open offer obligations under the SAST Regulations, depending on how significant the target company is to the overall transaction.

Real-World Illustration: The Adani–NDTV Transaction

The Adani Group’s acquisition of New Delhi Television Limited (NDTV) in 2022 is a well-known example of indirect acquisition under the SAST Regulations.

NDTV’s promoter company, RRPR Holding Private Limited, held approximately 29.18% of NDTV’s shares. Years earlier, RRPR had taken a loan from Vishvapradhan Commercial Private Limited (VCPL), and the loan agreement carried a right allowing VCPL to convert this debt into equity shares of RRPR at any time.

In August 2022, an Adani Group entity, AMG Media Networks Limited, acquired VCPL itself. VCPL then exercised its pre-existing right to convert the outstanding debt into equity, which gave it a 99.5% shareholding in RRPR Holding. Since RRPR held 29.18% of NDTV, this meant the Adani Group had indirectly acquired a 29.18% stake in NDTV — without buying a single NDTV share directly on the stock exchange.

This is a textbook case of indirect acquisition: the target company (NDTV) was never directly touched, but control over it changed hands because the entity that held its shares (RRPR, through VCPL) was itself acquired. As this indirect stake exceeded the 25% threshold under Regulation 3(1), it triggered a mandatory open offer. VCPL, along with AMG Media Networks and Adani Enterprises Limited, subsequently made an open offer to NDTV’s public shareholders for an additional 26% stake, which opened on November 22, 2022, and closed on December 5, 2022, at a price of ₹294 per share.

The structure of this transaction can be visualized as follows:

Adani Group (via AMG Media Networks) → acquires VCPL → VCPL converts debt into equity of RRPR Holding → RRPR Holding owns 29.18% of NDTV (Listed Target Company)

This example also shows why Regulation 5 of the SAST Regulations exists in the first place without it, a strategic stake in a listed company could effectively change hands through a holding-company transaction, entirely bypassing the open offer protections meant for public shareholders.

A Practical Example — Putting It All Together

Consider the following scenario:

Investor A currently holds: 22% Proposed acquisition: 5% PAC holding: 2% Post-acquisition aggregate holding: 29%

This kind of situation can be analysed step by step:

1. Identify the acquirer and any persons acting in concert.

2. Calculate the relevant aggregate voting rights, combining the acquirer’s holding with that of the PACs.

3. Determine whether the 25% threshold under Regulation 3(1) is crossed.

4. If crossed, examine the applicability of Regulation 3(1) in detail.

5. Determine whether any exemption under the Regulations 9 an 10 applies to the transaction.

If no exemption is available, examine the mandatory open offer obligation and the consequential compliance requirements that follow.

Conclusion

In any listed-company acquisition, the question is not merely “how many shares are being acquired.” The analysis must also take into account voting rights, persons acting in concert, previous acquisitions during the financial year, indirect acquisitions through holding structures, and perhaps most importantly whether the transaction results in acquisition of control, regardless of the shareholding percentage involved.

Understanding these triggers at the very beginning of a transaction allows parties to identify potential SAST implications early, well before the transaction progresses to a stage where restructuring the deal becomes difficult or costly.

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Disclaimer: This article is for general informational purposes only and is based on the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended up to December 5, 2025. It does not constitute legal advice.