SEBI takeover and delisting rules when control changes

Which SEBI rules actually bite when control of your company changes?

Scope first, everything else after. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 apply, by Regulation 1(3), to the direct and indirect acquisition of shares or voting rights in, or control over, a target company. And 'target company' is defined in Regulation 2(1)(z) as a company whose shares are listed on a stock exchange. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 apply, by Regulation 3(1), to the delisting of equity shares.

For this audience that single definitional point does most of the work. An exporter or manufacturer whose only listed paper is non-convertible debentures or commercial paper is outside both rulebooks on a control change . A promoter stake sale in such a company is a contractual and Companies Act matter, not an open-offer matter. Its continuous obligations sit instead under the debt-side instruments (the Master Circular for listing obligations and disclosure requirements for Non-convertible Securities, Securitized Debt Instruments and/ or Commercial Paper dated Jul 11, 2025) plus whatever change-of-control covenant its debenture trust deed carries.

A company planning to list should read the direction of travel the other way. SAST bites from the moment a class of equity shares is listed, and Regulation 4(1)(a) of the Delisting Regulations bars any voluntary delisting until three years have elapsed since the listing of that class. Listing is a three-year one-way door on the exit side, and that belongs in the IPO decision, not in a later board paper.

Two carve-outs are worth naming because they are easy to miss. The proviso to SAST Regulation 1(3) and Delisting Regulation 3(2)(a) both exclude companies whose specified securities are listed on the Innovators Growth Platform without having made a public issue. Delisting Regulation 3(2)(b) excludes a delisting made pursuant to a resolution plan under section 31 of the Insolvency and Bankruptcy Code, 2016, where that plan itself provides for delisting or for an exit to existing public shareholders at a specified price.

Where the rule bites differently for an operating company than for a financial firm: a broker, an adviser or an asset manager holds a SEBI registration it can lose. An exporter does not. Its exposure on a botched control change is therefore not deregistration but directions under Regulation 32 of the Takeover Regulations, monetary penalties under Chapter VIA of the SEBI Act, and (usually the one that actually hurts) a transaction that stalls mid-flight while the merchant banker and the exchange work out what should have been announced and when.

What acquisition thresholds trigger a mandatory open offer?

There are four independent triggers, and a transaction has to be tested against each of them separately. Passing one test tells you nothing about the other three.

Regulation 3(1) is the headline threshold: acquiring shares or voting rights in a target company which, taken with shares or voting rights already held by the acquirer and by persons acting in concert with him, entitle them to exercise twenty-five per cent or more of the voting rights. Regulation 3(3) adds an easily missed refinement. Where an individual person within the group crosses the threshold, the obligation arises even though the aggregate shareholding of the acquirer and its PACs has not changed at all.

Regulation 3(2) is the creeping acquisition limit. An acquirer already holding twenty-five per cent or more, but less than the maximum permissible non-public shareholding, may not acquire in any financial year additional shares entitling him to exercise more than five per cent of the voting rights. 'Financial year' means the twelve months commencing 1 April, under Regulation 2(1)(i). Two explanations to that regulation are commercially decisive and routinely missed:

• Gross acquisitions alone are counted , regardless of any intermittent fall in shareholding. Selling two per cent in June and buying six per cent in November is a six per cent acquisition, not a four per cent one.
• Where the target issues new shares, the quantum of acquisition is the difference between the pre-allotment and post-allotment voting percentage. A promoter who subscribes to a preferential issue can therefore breach the five per cent limit without buying a single share on the market. The arithmetic runs off the denominator, not off a purchase.

Regulation 4 is the one that catches term sheets. It requires an open offer on the acquisition of control over a target company, irrespective of acquisition or holding of shares or voting rights. There is no percentage in it. A fund taking twelve per cent with affirmative-vote rights over the business plan, board composition, senior hires and capital expenditure is squarely in Regulation 4 territory even though no shareholding test is anywhere near being crossed.

Regulation 5 covers indirect acquisition: where acquiring shares or control over an upstream company or entity delivers, in substance, the same voting rights or control in the Indian listed target. Group reorganisations offshore reach the Indian company through this route.

On size, Regulation 7(1) requires a Regulation 3 or Regulation 4 offer to be for at least twenty-six per cent of the total shares of the target company, calculated as of the tenth working day from closure of the tendering period. A voluntary offer under Regulation 6 must be for at least an additional ten per cent of voting rights (Regulation 7(2)), and is hedged: it is open only to a holder of twenty-five per cent or more but below the maximum permissible non-public shareholding, is barred where the acquirer bought shares in the preceding fifty-two weeks without attracting an offer obligation, and bars further acquisition for six months after completion. Regulations 3(5) and 6(4) read '25%' as '49%' for Innovators Growth Platform listings. Regulations 6A and 6B bar wilful defaulters and fugitive economic offenders from making an open offer at all. A buyer-side diligence item, not a target-side one, but the target's board carries the reputational cost of missing it.

Reg 2(1)(z) of the Takeover Regulations, 2011 defines 'target company' as a company whose shares are listed on a stock exchange; Reg 3(1) of the Delisting Regulations, 2021 applies to equity shares. Check what class of our securities is actually listed. </>), soThat: (<> A company with only listed NCDs or commercial paper is outside both rulebooks on a control change and stops here; an equity-listed exporter continues to the next question. </>), }, , , , , , ]} conclusion= />

How is the open offer price fixed if your shares are thinly traded?

Regulation 8(1) sets a floor, not a ceiling. Nothing stops an acquirer offering more; a great deal stops it offering less. For a direct acquisition, Regulation 8(2) makes the offer price the highest of six limbs:

• (a) the highest negotiated price per share under the agreement that triggered the open offer;
• (b) the volume-weighted average price paid by the acquirer or persons acting in concert during the fifty-two weeks immediately preceding the date of the public announcement;
• (c) the highest price paid by them for any acquisition during the twenty-six weeks immediately preceding the date of the public announcement;
• (d) the volume-weighted average market price of the shares for sixty trading days immediately preceding the public announcement, on the stock exchange recording the highest volume. But only provided such shares are frequently traded;
• (e) where the shares are not frequently traded, the price determined by an independent registered valuer taking into account valuation parameters including book value, comparable trading multiples and such other parameters as are customary for valuation of shares of such companies; and
• (f) the per-share value computed under Regulation 8(5), where applicable.

This is the point at which a mid-cap exporter diverges sharply from a financial firm. Limb (d) is conditional, and the condition is defined in Regulation 2(1)(j): frequently traded shares are shares of a target company in which the traded turnover on any stock exchange during the twelve calendar months preceding the calendar month in which the public announcement is made is at least ten per cent of the total number of shares of that class . Plenty of promoter-heavy manufacturers, sitting on sixty to seventy-five per cent promoter holding with a thin float and low turnover, simply fail that test. When they do, limb (d) drops out of the calculation and limb (e) takes over. And limb (e) is a number that neither the promoter nor the buyer controls.

There is a live change to flag on limb (e). The words 'an independent registered valuer' were substituted for 'the acquirer and the manager to the open offer' by the SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2025, with effect from 03.01.2026 , with a nine-month window to complete valuations already under way at that date. The valuation is no longer something the acquirer and its banker arrive at between themselves.

Regulation 8(3) sets a different ladder for indirect acquisitions that do not meet the deemed-direct parameters in Regulation 5(2). If your control change reaches the Indian company through an offshore holding structure, price it under 8(3), not 8(2).

Then the cash cost, which surprises founder-CFOs more than the price does. Regulation 17(1) requires an escrow account created not later than two working days prior to the detailed public statement, holding twenty-five per cent of the consideration on the first five hundred crore rupees plus ten per cent of the balance . Where the offer is conditional on a minimum level of acceptance, the higher of one hundred per cent of the consideration payable at that minimum acceptance level, or fifty per cent of the total consideration, must be in cash. For an indirect acquisition announced under Regulation 13(2)(e), one hundred per cent of the consideration goes into escrow. Regulation 17(3) permits the escrow to be cash, a bank guarantee from a scheduled commercial bank in favour of the manager to the offer, or deposited frequently traded securities. But Regulation 17(4) still requires at least one per cent of the total consideration in cash in every case. And Regulation 12(1) requires the acquirer to appoint a merchant banker registered with SEBI, who is not an associate of the acquirer, as manager to the open offer, before making the public announcement.

Which acquisitions are exempt, and what must still be filed?

An exemption removes the open offer. It does not remove the paperwork. That distinction is the single most common source of a post-closing SEBI query on an otherwise clean family or group transaction.

Regulation 10(1)(a). Inter se transfer among qualifying persons: immediate relatives; persons named as promoters in the shareholding pattern of the target company for not less than three years prior to the proposed acquisition; a company with its subsidiaries, its holding company, other subsidiaries of that holding company, and persons holding not less than fifty per cent of its equity shares, where they are all under exclusive common control; and persons acting in concert for not less than three years prior to the proposed acquisition and disclosed as such. The proviso caps the price: for frequently traded shares the acquisition price must not be higher by more than twenty-five per cent of the volume-weighted average market price for sixty trading days preceding the date of the notice under Regulation 10(5), and for infrequently traded shares not more than twenty-five per cent above the price determined under Regulation 8(2)(e).

This is the provision a family-run exporter reaches for on a generational transfer. And the three-year seasoning requirement is what usually defeats it, because a relative added to the promoter group recently has not been named in the shareholding pattern for long enough, however genuine the succession. Where the transfer is on death rather than by agreement, Regulation 10(1)(g) exempts transmission, succession or inheritance outright.

The other exemptions an operating company actually uses:

• Reg 10(1)(d)(iii). A scheme of arrangement not directly involving the target company is exempt only where the cash and cash equivalents paid as consideration are less than twenty-five per cent of the consideration paid, and persons holding at least thirty-three per cent of the voting rights in the combined entity are the same as those who held the entire voting rights before the scheme.
• Reg 10(1)(da). Acquisition pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016.
• Reg 10(1)(e). Acquisition on enforcement of security by a secured creditor under the SARFAESI Act, 2002.
• Reg 10(1)(f). Acquisition made pursuant to the Delisting Regulations.
• Reg 10(2B). A preferential issue complying with Regulation 164A of the ICDR Regulations is exempt from Regulation 3(1) and Regulation 4, with infrequently traded shares priced under ICDR Regulation 165.
• Reg 10(3). A shareholder pushed past twenty-five per cent purely by the company's own buy-back is exempt, provided he reduces his voting rights below the threshold within ninety days from the date of closure of the buy-back.
• Reg 10(4)(a)-(b). Subscription to a rights issue up to entitlement, and beyond entitlement subject to the acquirer not having renounced any entitlement and the price not exceeding the ex-rights price computed under that regulation.

Now the filings, none of which the exemption removes. Regulation 10(5) requires intimation to the stock exchanges at least four working days prior to the proposed acquisition, for inter se transfers and for acquisitions under Regulation 10(4)(e) and (f). Regulation 10(6) requires a report to the stock exchanges not later than four working days from the acquisition, for any exemption relied upon. Regulation 10(7) requires, for the sub-regulations it lists, a report to SEBI within twenty-one working days of the date of acquisition, accompanied by a non-refundable fee of rupees one lakh fifty thousand . Separately, Regulation 11 allows SEBI to grant a case-specific exemption or relaxation for reasons recorded in writing, on application. A route, not a right.

What must an acquirer or promoter disclose, and by when?

Chapter V of the Takeover Regulations carries the shareholding disclosures; the LODR Regulations, 2015 carry the event and agreement disclosures on top. Both run in parallel with any open offer, and neither waits for it.

Regulation 29(1) : any acquirer who, with persons acting in concert, acquires shares or voting rights aggregating to five per cent or more of the shares of a target company must disclose their aggregate shareholding and voting rights. Regulation 29(2) : any person holding five per cent or more must disclose the number of shares held together with any change exceeding two per cent of the total shareholding or voting rights. And the regulation expressly includes a change that takes the holding below five per cent, which is why an exiting promoter is as much a filer as an incoming buyer. Regulation 29(3) gives both disclosures the same clock: within two working days of receipt of intimation of allotment, or of the acquisition or disposal, to every stock exchange where the shares are listed and to the target company at its registered office. Regulation 28(2) treats convertible securities as shares for the whole of this Chapter.

The encumbrance definition in Regulation 28(3) is deliberately wide: any restriction on the free and marketable title to shares, by whatever name called, whether executed directly or indirectly, including pledge, lien, negative lien and non-disposal undertaking, and any covenant, transaction, condition or arrangement in the nature of an encumbrance. For a promoter-led exporter that definition catches the non-disposal undertaking routinely given to a term lender against export receivables financing. A document the treasury team signs and the secretarial team never hears about.

Regulation 31(1)-(3) requires the promoter to disclose the creation, invocation or release of an encumbrance within seven working days to the stock exchanges and to the target company, with a proviso excluding encumbrances undertaken in a depository. Regulation 31(4)-(5) requires the promoter to declare on a yearly basis that he has not made any encumbrance directly or indirectly other than those already disclosed, within seven working days from the end of each financial year to the stock exchanges and to the audit committee of the target company.

The LODR overlay adds three things. Regulation 30(6) sets the event-disclosure clock: thirty minutes of closure of the board meeting for decisions taken there, twelve hours where the event or information emanates from within the listed entity, and twenty-four hours where it does not. Schedule III Part A Para A clause 5A requires disclosure of agreements among shareholders, promoters, promoter group entities, related parties, directors, key managerial personnel or employees, or with third parties, whose purpose or effect is to impact the management or control of the listed entity or impose any restriction or create any liability upon it. Whether or not the listed entity is a party to them. And Regulation 30A puts the corresponding duty on those parties to inform the listed entity within two working days of entering into such an agreement. Clause 4(i) of the same Para A makes a board decision on voluntary delisting a disclosable board decision in its own right.

Finally, on the way out: LODR Regulation 31A(10) relieves an outgoing promoter of some of the reclassification conditions where the intent to reclassify was disclosed in the letter of offer for the open offer, subject to the reclassification being disclosed within twenty-four hours of completion of the open offer. That is a drafting instruction for the letter of offer, not a post-closing cleanup item. If the intent is not in the letter of offer, the relief is not available.

Sagar Textiles Limited (illustrative) has 5,00,00,000 equity shares listed on a nationwide exchange. The promoter family holds 52%. On Monday, 5 October 2026, the promoters sign a share purchase agreement selling 1,30,00,000 shares (26%) to a private equity fund at a negotiated &#8377;420 per share, with board-nomination and affirmative-vote rights. Traded turnover in the shares over the twelve calendar months preceding October 2026 was about 4% of total shares. The fund holds no shares in the company before this deal and has bought none in the preceding fifty-two weeks. </> } result= >

How does a voluntary delisting run, and how is the floor price set?

Eligibility comes before sequence. Regulation 4(1) of the Delisting Regulations, 2021 bars a voluntary delisting unless three years have elapsed since the listing of that class of equity shares; where any instrument convertible into the same class remains outstanding; within six months of completing a buy-back; and within six months of a preferential allotment. With a proviso disapplying the preferential-allotment bar for a new acquirer proceeding under Regulation 5A of the Takeover Regulations, or for a new promoter following reclassification. Regulation 4(2) bars an acquirer from proposing delisting if it sold shares of the company during the six months before the initial public announcement.

Regulation 4(4) is the one a founder-CFO most often gets wrong: the acquirer may not, directly or indirectly, use the funds of the company itself to finance the exit. In a group where the listed operating company is the only entity holding cash, that constraint decides whether the delisting is fundable at all. And it has to be answered before the initial public announcement, because the escrow under Regulation 14 falls due seven working days after shareholder approval.

The sequence then runs on working-day clocks that mostly measure from the previous step, so a slip at one stage moves everything behind it: initial public announcement on the date the acquirer decides to delist, with a copy to the company within one working day (Reg 8(1)); merchant banker appointed as Manager to the offer before the IPA and not an associate of the acquirer (Reg 9); board approval not later than twenty-one days from the IPA, after a Peer Review Company Secretary carries out due diligence on two years of the acquirer's and the top-twenty-five shareholders' dealings and certifies compliance (Reg 10(1)); special resolution not later than forty-five days from board approval, by postal ballot and/or e-voting (Reg 11(1)), acted upon only if the votes cast by public shareholders in favour are at least two times the votes cast against (Reg 11(4)).

After the resolution: in-principle application to the exchange not later than fifteen working days from the special resolution or from the receipt of any later statutory approval, disposed of by the exchange within fifteen working days (Reg 12(1)); escrow opened not later than seven working days from shareholder approval with twenty-five per cent of the total consideration (Reg 14(1)), the remaining seventy-five per cent deposited before the detailed public announcement (Reg 14(3)); detailed public announcement within one working day of in-principle approval (Reg 15(1)); letter of offer within two working days of the DPA (Reg 16(1)); bidding or tendering period beginning within seven working days of the DPA and remaining open for five working days (Reg 17(1)), outcome announced within two hours of closure (Reg 17(3)), and the success-or-failure public announcement within two working days (Reg 17(4)).

The floor price is now self-contained in Regulation 19A(1) : not less than the highest of the fifty-two-week volume-weighted average price paid by the acquirer with PACs; the highest price paid by them in the preceding twenty-six weeks; the adjusted book value on consolidated financials as determined by an independent registered valuer; the sixty-trading-day volume-weighted average market price where the shares are frequently traded; and a registered valuer's price where they are not. The adjusted book value formula A + B + C + D. L set out in the Explanation revalues jewellery, artistic work, unquoted securities and immovable property at market or stamp-duty value. Which is why an asset-heavy manufacturer sitting on decades-old factory land can find its delisting floor sitting well above the traded price. Regulation 19A(2) fixes the reference date as the date of the initial public announcement, or the next trading day where the announcement was made after market hours or on a non-trading day.

When does reverse book building succeed, and what are the alternatives?

The ninety per cent test governs everything downstream. Regulation 21(a) deems a delisting offer, or a counter offer, successful where the post-offer shareholding of the acquirer together with the shares tendered and accepted at the discovered price, fixed price or counter-offer price reaches ninety per cent of the total issued shares of that class. Excluding shares held by a custodian against depository receipts issued overseas, shares held by an employee benefit scheme trust, and shares held by inactive shareholders, meaning vanishing and struck-off companies, shares transferred to the IEPF Authority and unclaimed shares held under LODR Regulation 39(4) with Schedule VI. Those exclusions are certified by the Peer Review Company Secretary, and the cut-off date is the date of receipt of the exchange's in-principle approval. Schedule II clause 13 defines the discovered price as the price at which the accepted eligible bids take the acquirer to that ninety per cent.

The acquirer's obligation to accept is set by Regulation 22 . Under 22(1)-(2) it is bound to accept where the discovered price equals the floor price or the indicative price, and it remains bound at the indicative price even where the discovered price exceeds the floor but falls below that indicative price. Regulation 22(3) releases the acquirer only where the discovered price exceeds the indicative price. A counter offer is available under 22(4) only where post-offer shareholding with tendered shares is not less than seventy-five per cent and not less than fifty per cent of the public shareholding has been tendered; 22(4A) requires it within two working days of closure of bidding; and 22(5) sets the counter-offer price at not less than the higher of the volume-weighted average price of the shares tendered and the indicative price.

Two alternatives matter to an operating company. Regulation 20A fixed price delisting replaces the bid-discovery mechanic with a stated price at least fifteen per cent above the Regulation 19A floor , binding on the acquirer once the ninety per cent threshold is reached. Attractive because it removes price risk, but available only where the shares are frequently traded, which closes it to precisely the thinly traded manufacturer that would most like the certainty. Regulation 35 small company delisting dispenses with the Chapter IV process entirely where paid-up capital does not exceed ten crore rupees and net worth does not exceed twenty-five crore rupees as on the last date of the preceding financial year, the shares traded on each exchange in the preceding twelve calendar months are less than ten per cent of the total shares, and the company has not been suspended in the preceding year. It requires written consent from public shareholders holding ninety per cent or more of the public shareholding, completion within seventy-five working days of the first communication, and cash payment within fifteen working days thereafter, at not less than the price determined under Regulation 8(2)(e) of the Takeover Regulations.

Where the delisting is the buyer's objective from the outset, Regulation 5A of the Takeover Regulations lets the incoming acquirer run the open offer and the delisting together, provided the intention to delist is declared both in the public announcement and in the detailed public statement, with the indicative price not below the book value computed per the Explanation to Delisting Regulation 22(5). If the delisting threshold is met, all tendering shareholders receive the indicative price; if it is not, they receive the open offer price.

Failure has a tail. Regulation 23(2)(c) bars another delisting offer for six months. Regulation 24(2) imposes interest at ten per cent per annum on late payment. And Regulations 26(1)-(2) give the remaining public shareholders a right to tender their shares for a minimum of one year from the date of delisting at the same price at which the shares were delisted, with Regulation 27 requiring quarterly newspaper advertisements, follow-up communications and quarterly progress reports to the exchange throughout.

One more item belongs here because it is decided at the same moment. Takeover Regulation 7(4) provides that where an open offer takes the acquirer above the maximum permissible non-public shareholding, he must bring the non-public shareholding down to the level specified and within the time permitted under Securities Contract (Regulation) Rules, 1957. Unless he stated upfront an intention to delist and the delisting fails, or stated an intention to retain the listing, in which case a proportionate reduction of the shares acquired is permitted. Read the current level and timeline in the SCR Rules themselves; they are not written into the Takeover Regulations and should not be assumed.

Control-change compliance checklist for a promoter-led operating company

Everything above, in the order the work is actually done: what has to be settled before signature, what fires on signature, what runs through the offer, and what outlives the deal.

Before signing

• Confirm the equity shares are listed at all. If the only listed paper is NCDs or commercial paper, SAST and the Delisting Regulations do not apply to the control change, and the analysis moves to the debt-side instruments and the trust deed.
• Test the deal against Reg 3(1), Reg 3(2), Reg 4 and Reg 5 separately. Governance rights alone can trigger Reg 4 with no equity threshold crossed anywhere.
• Run the frequently-traded test in Reg 2(1)(j) over the twelve calendar months preceding the announcement month. It decides whether the price comes from a market VWAP or from a registered valuer, and it is knowable long before signature.
• Check three-year seasoning if an inter se promoter exemption under Reg 10(1)(a) is intended. A recently added promoter-group member defeats it.
• Check Reg 6A and 6B disqualifications on the buyer: wilful defaulters and fugitive economic offenders cannot make an open offer at all.
• Appoint an unassociated registered merchant banker under Reg 12(1) before any announcement is made.
• Size the Reg 17 escrow and the Reg 16(1) filing fee into the funding plan. 25% of the first &#8377;500 crore plus 10% of the balance, at least 1% of it in cash, in place two working days before the DPS.

On signature, through the offer, and after

• Public announcement on the date of agreeing (Reg 13(1)). With Reg 13(2)(g) moving that date to the board's authorisation of a preferential issue. A 'confidential until closing' clause cannot survive this.
• Disclose under Takeover Reg 29(3) within two working days. Both the incoming 5% acquisition and the exiting promoter's change exceeding 2%.
• Disclose the agreement under LODR Schedule III Part A Para A clause 5A within the Reg 30(6) window, and have the counterparties inform the company under LODR Reg 30A within two working days.
• Detailed public statement within five working days of the PA (Reg 13(4)), then the draft letter of offer to SEBI within five working days of the DPS (Reg 16(1)).
• Committee of independent directors publishes reasoned recommendations at least two working days before the tendering period opens (Reg 26(7)).
• Tendering opens not later than twelve working days from SEBI's comments and stays open ten working days (Reg 18(8)); completion and payment within ten working days of the close of tendering (Reg 18(10)); post-offer advertisement within five working days after the offer period (Reg 18(12)).
• If an exemption was used instead : Reg 10(5) four-working-day prior intimation, Reg 10(6) four-working-day report, and Reg 10(7) twenty-one-working-day report to SEBI with the &#8377;1,50,000 fee.
• Standing items that outlive the deal : Reg 31 encumbrance disclosures within seven working days of creation, invocation or release, and the yearly declaration to the exchanges and the audit committee within seven working days of the financial year end. Reg 30 no longer exists. Stop filing it.
• Instrument hygiene, permanently : cite every master circular by title and date, and verify the maximum permissible non-public shareholding level and timeline in the Securities Contracts (Regulation) Rules, 1957 rather than assuming it.

Update history

• 2026-08-14 First published.