The single-most important regulation in India, governing the acquisition of shares or control in an Indian listed company is the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, or the Takeover Code.
Under the current Takeover Code, with the acquisition of 15 per cent or more of the voting rights of the target company, open offer for additional 20 per cent shares is mandatory. This restricts the acquirer to make large investments in the company, where controlling the company is not an objective, limiting the acquirer to below 15 per cent so as to avoid an open offer.
A panel set up by the regulator had last year proposed changes to takeover rules that are likely to offer better terms to minority shareholders, but could cut down the number of deals in the near term.
The takeover panel has suggested raising the trigger point for open offers to 25% from 15%. The panel has also recommended lifting the mandatory open offer size to 100% from 20%, making it easier for minority shareholders to participate in open offers arising from mergers and acquisitions.