THE NATIONAL UNIVERSITY OF ADVANCED LEGAL STUDIES

(A State University Est. by Act 27 of 2005 of Kerala State Legislature)

Kalamassery, Kochi - 683503, Kerala

COMPANY LAW

SEBI - OVERVIEW OF REGULATIONS ON TAKEOVER.

SEMESTER- 5
Submitted By:

Abraham John C
1762
B.A LL.B (Hons.)
The National University of Advanced Legal Studies (NUALS)

Submitted To:

Dr. Anil R Nair

Associate Professor
Company Law
The National University of Advanced Legal Studies (NUALS)
I. Objectives and scope of the study
The study's objectives are to assess SEBI's Takeover Regulations in India, considering how
they protect minority shareholders, enhance transparency, and facilitate corporate
transactions. It also evaluates their alignment with global standards, addressing challenges
like complexity, compliance, and adaptability. The study explores digitalization's impact and
regulatory responsiveness to market dynamics, aiming for a comprehensive analysis within
its scope.

II. Background and significance of SEBI's takeover regulations

The Securities and Exchange Board of India (SEBI) is the principal regulatory authority
overseeing India's securities markets. Its takeover regulations have played a pivotal role in
shaping the dynamics of corporate control and shareholder protection in the country. To
appreciate the significance of SEBI's takeover regulations, it is imperative to delve into their
historical evolution and the financial imperatives that necessitated their inception.

Historical Evolution

The origins of SEBI's takeover regulations can be traced back to the early 1990s when India
was undergoing a series of economic reforms, liberalization, and globalization. This period
witnessed a surge in foreign direct investment, an influx of multinational corporations, and an
increased appetite for investment in Indian companies. As the Indian corporate landscape
opened up to external investors, it became imperative to establish a robust regulatory
framework that would safeguard the interests of all stakeholders involved, particularly minority
shareholders.

Financial Imperatives

One of the primary financial imperatives that underpinned the creation of SEBI's takeover
regulations was the need to foster investor confidence and protect minority shareholders from
unfair and coercive takeover practices. Prior to the introduction of these regulations, there was
a lack of clear guidelines governing the acquisition of shares and change of control in listed
companies. This ambiguity created opportunities for unscrupulous entities to engage in hostile
takeovers and engage in activities detrimental to the interests of minority shareholders.
Moreover, the absence of a well-defined takeover code could potentially destabilize the
securities markets by causing excessive volatility in stock prices, which in turn could erode
investor trust. The Indian government recognized the need for a regulatory mechanism to
ensure that takeovers were executed transparently, fairly, and in a manner that did not unduly
disadvantage minority shareholders.

SEBI's takeover regulations hold immense significance within the Indian financial landscape,
as they are instrumental in regulating corporate takeovers and change of control in listed
companies. These regulations are designed to achieve several vital objectives that contribute to
the stability, transparency, and fairness of India's securities markets.

Protection of Minority Shareholders

One of the foremost significances of SEBI's takeover regulations is the protection of minority
shareholders. These regulations create a level playing field for all shareholders, ensuring that
they are treated equitably during takeover attempts. Minority shareholders are particularly
vulnerable during corporate takeovers, as their interests can be easily overshadowed by the
dominant shareholders or acquirers. By mandating a fair and transparent process for takeovers,
these regulations mitigate the risk of minority shareholders being subjected to unfair treatment
or being coerced into accepting unfavorable terms.

Enhancement of Corporate Governance

SEBI's takeover regulations contribute significantly to enhancing corporate governance in

India. They impose disclosure requirements, reporting obligations, and stringent timelines on
acquirers, thereby promoting transparency and accountability. These regulations require
acquirers to provide detailed information about their intentions, funding sources, and future
plans for the target company. Such transparency fosters informed decision-making by
shareholders and ensures that corporate takeovers are driven by sound business strategies rather
than hidden agendas.

Market Stability and Integrity

Another vital significance of SEBI's takeover regulations lies in their role in maintaining
market stability and integrity. Unregulated takeovers can lead to excessive volatility in stock
prices, which can disrupt market equilibrium and erode investor trust. By providing a structured
framework for takeovers, these regulations minimize the potential for market disruptions and
the manipulation of share prices. They also instill confidence among investors that the takeover
process will be orderly and adhere to prescribed rules.

Prevention of Unfair Practices

SEBI's takeover regulations serve as a bulwark against unfair and coercive takeover practices.
Hostile takeovers and manipulative tactics can be detrimental to the interests of all
stakeholders, including minority shareholders, employees, and creditors. These regulations set
clear boundaries on the conduct of acquirers and prohibit tactics that could be detrimental to
shareholders or the target company. By doing so, they ensure that takeovers are conducted in a
manner that is consistent with ethical business practices and legal norms.

A. Overview of SEBI as the regulatory authority

The Securities and Exchange Board of India (SEBI) serves as the primary regulatory authority
overseeing the securities and capital markets in India. Established in 1988 as an autonomous
body, SEBI has evolved over the years to become a pivotal institution in shaping and regulating
India's financial landscape.

 Establishment and Legal Framework

SEBI was established as a statutory regulatory body under the Securities and Exchange Board
of India Act, 1992. This legislation conferred upon SEBI the authority to regulate and supervise
the securities markets, protect the interests of investors, and ensure the orderly and transparent
functioning of the markets. SEBI operates independently, free from governmental interference,
which is critical to its effectiveness as a regulatory authority.

 Primary Functions

SEBI's primary functions encompass a wide array of activities aimed at maintaining the
integrity and stability of India's securities markets. These functions include:

Regulation and Oversight: SEBI formulates and enforces regulations governing various aspects
of the securities markets, including listing and disclosure norms, trading rules, and takeover
regulations. It continuously monitors market activities to detect and prevent irregularities.
Investor Protection: SEBI is committed to safeguarding the interests of investors by ensuring
that they receive accurate and timely information, promoting fair and transparent trading
practices, and taking action against fraudulent activities.

Market Development: SEBI plays a pivotal role in fostering the development and growth of
India's capital markets. It introduces reforms, instruments, and initiatives to attract investment,
enhance liquidity, and diversify financial products.

Regulating Intermediaries: SEBI regulates various market participants, such as stock

exchanges, brokers, mutual funds, and credit rating agencies, to maintain high standards of
conduct, professionalism, and compliance.

Enforcement and Surveillance: SEBI has enforcement powers to investigate and penalize
violations of securities laws and regulations. It conducts surveillance to detect market
manipulation, insider trading, and other fraudulent activities.

B. Historical evolution of takeover regulations in India

Established in 1988 under the Securities and Exchange Board of India Act, 1992, SEBI
operates autonomously and independently to regulate and supervise the functioning of these
markets. Its core functions include the formulation and enforcement of regulations, protection
of investor interests, development of the capital markets, regulation of intermediaries, and
enforcement and surveillance. SEBI's significance lies in its role in instilling confidence in the
markets, safeguarding investors, promoting market development, and ensuring adherence to
ethical and legal standards. It has earned recognition on the global stage for its alignment with
international best practices, making it a crucial institution in India's financial regulatory
framework.

III. SEBI Takeover Code: Key Provisions

A. Definition of takeover, acquisition, and control

The SEBI Takeover Code, a fundamental component of the regulatory framework governing
corporate takeovers and change of control in India, encompasses a plethora of key provisions
that elucidate and regulate the nuances of takeover activities. Among these provisions, the
definitions of "takeover," "acquisition," and "control" serve as pivotal cornerstones,
establishing the framework within which the code operates.

Firstly, the code defines a "takeover" as an acquisition of either (a) 25% or more of the voting
rights in a target company, (b) the acquisition of control over the management or the board of
directors of the target company, or (c) the acquisition of assets of the target company that
account for 25% or more of its total assets. This definition is comprehensive, encompassing
both direct and indirect acquisitions of voting rights and assets, ensuring that all potential
avenues of control are scrutinized and regulated.

Secondly, the term "acquisition" is delineated as the direct or indirect acquisition of shares or
voting rights in a target company, either individually or in concert with other acquirers. This
definition underscores the code's focus on transparency, as it applies to both individual and
collective actions, preventing parties from circumventing regulations through collaborative
efforts.

Thirdly, "control" is a pivotal concept within the SEBI Takeover Code. Control is ascertained
when an entity or individual holds the right to exercise, or actually exercises, 25% or more of
the voting rights in a company, appoints a majority of the directors, or influences the
management or policy decisions of the company in a manner that is likely to affect its
operations or shareholders' interests. The definition of control is dynamic, as it takes into
account not only the quantum of voting rights but also the influence exercised over the
company's management and policies, thereby capturing subtle forms of control that may not be
apparent solely from the ownership of shares.

These definitions, while seemingly technical, have far-reaching implications for corporate
governance and the protection of minority shareholders. By clearly delineating the thresholds
and criteria for takeovers, acquisitions, and control, the SEBI Takeover Code ensures that any
change in the ownership or management of a listed company is subject to rigorous scrutiny and
adherence to prescribed regulations. This, in turn, fosters transparency, safeguards the interests
of minority shareholders, and maintains the integrity and stability of India's securities markets.

In essence, the definitions of takeover, acquisition, and control within the SEBI Takeover Code
provide the essential framework for interpreting and implementing the code's provisions. They
serve as critical instruments in delineating the boundaries of corporate transactions, ensuring
that all stakeholders are afforded the necessary protection and that the regulatory environment
remains conducive to fair and transparent dealings in the Indian securities markets.\

B. Threshold limits for open offers

The SEBI Takeover Regulations in India prescribe threshold limits for open offers, which are
mandatory offers made by an acquirer to the shareholders of a target company when certain
levels of share acquisition are crossed. These threshold limits are crucial in determining when
an open offer becomes mandatory and what percentage of the target company's shares the
acquirer is required to acquire. Here are the key threshold limits for open offers:

 Initial Trigger

The initial trigger for an open offer is the acquisition of 25% or more of the shares or voting
rights in a target company. When an acquirer crosses this threshold, they are required to make
an open offer to acquire at least an additional 26% of the target company's shares from the
public shareholders.

 Additional Acquisition

If an acquirer already holds between 25% and 75% of the shares or voting rights in a target
company and intends to acquire more shares, any subsequent acquisition of more than 5% of
the voting rights in any financial year triggers an obligation to make an open offer. In such
cases, the acquirer is required to make an open offer to acquire an additional 26% of the target
company's shares from the public shareholders.

 Change in Control

If there is a change in control of the target company, either through an agreement or a board
resolution, it triggers an open offer requirement. This is irrespective of the acquirer's existing
shareholding. The acquirer must make an open offer to acquire at least 26% of the target
company's shares from the public shareholders.

 Competitive Bids

In the case of a competitive bid, where multiple acquirers are vying for the same target
company, the acquirer who makes the highest bid and acquires the largest number of shares
will be required to make an open offer for at least 26% of the target company's shares.
  Subsequent Acquisition

If an acquirer has already made an open offer and subsequently acquires more shares within a
year from the date of the offer, they are required to make an open offer for an additional 10%
of the target company's shares.

These threshold limits are designed to ensure that minority shareholders are protected and have
an opportunity to exit the company if there is a change in control. They also aim to maintain
transparency and fairness in takeover transactions by requiring acquirers to make open offers
when they acquire significant stakes in a target company. SEBI closely monitors compliance
with these thresholds to uphold the principles of corporate governance and shareholder
protection in India's securities markets.

C. Mandatory and voluntary open offers

In the context of the SEBI Takeover Regulations in India, open offers can be categorized into
two main types: mandatory open offers and voluntary open offers.

 Mandatory Open Offers: These are offers that an acquirer is obligated to make under
specific circumstances defined by the regulations. The most common trigger for a
mandatory open offer is the acquisition of 25% or more of the shares or voting rights
in a target company. When this threshold is crossed, the acquirer is mandated to make
an open offer to acquire an additional 26% of the target company's shares from the
public shareholders. Other triggers for mandatory open offers include a change in
control of the target company and subsequent acquisitions by an acquirer who has
already made an open offer. These mandatory offers are designed to protect the interests
of minority shareholders and ensure transparency in change of control transactions.

 Voluntary Open Offers: Voluntary open offers, as the name suggests, are not compelled
by regulatory requirements but are made voluntarily by an acquirer. Acquirers may
choose to make a voluntary open offer to increase their stake in the target company or
to demonstrate their commitment to the company's shareholders. Unlike mandatory
open offers, the acquirer has more flexibility in determining the size and conditions of
a voluntary offer. However, once a voluntary offer is made, the acquirer is bound by
the terms and commitments specified in the offer document. Voluntary open offers can
 be strategic moves by acquirers looking to consolidate their holdings or build goodwill
among shareholders.

In summary, mandatory open offers are legally required under specific circumstances,
primarily to protect minority shareholders, while voluntary open offers are made at the
discretion of the acquirer to achieve strategic objectives or build investor confidence. Both
types of open offers are subject to regulatory oversight and must comply with the SEBI
Takeover Regulations to ensure fairness and transparency in corporate takeover transactions in
India.

D. Disclosure and transparency requirements

Disclosure and transparency requirements under the SEBI Takeover Regulations in India are
pivotal in ensuring that all stakeholders involved in a corporate takeover or change of control
transaction are provided with accurate and timely information. These requirements mandate
that both the acquirer and the target company make comprehensive disclosures to the public
and regulatory authorities. Acquirers are obligated to disclose their detailed acquisition
intentions, financing arrangements, and future plans for the target company. This information
enables shareholders to make informed decisions regarding their investments. Additionally,
disclosure norms require target companies to promptly inform the stock exchanges and
shareholders about any potential takeover or acquisition offers received. These regulations also
demand transparency in the pricing and tendering process during open offers, preventing any
unfair advantages to acquirers. Such stringent disclosure and transparency requirements play a
crucial role in maintaining market integrity, protecting minority shareholders, and ensuring that
takeover transactions are conducted fairly and in compliance with regulatory standards. Failure
to adhere to these requirements can result in regulatory penalties, highlighting the seriousness
with which SEBI views transparency and disclosure in takeover transactions.

E. Exemptions and special provisions

Exemptions and special provisions within the SEBI Takeover Regulations in India introduce
flexibility and cater to unique circumstances in corporate takeover scenarios. These provisions
are designed to accommodate specific situations, ensuring that the regulations remain practical
and effective. Some notable exemptions and special provisions include:
Exemption for Open Offers: Certain acquisitions are exempt from the requirement to make an
open offer. For example, acquisitions resulting from inter-se transfer among promoters and
acquisitions by a person who already holds 25% or more but less than 75% of the target
company's voting rights are exempt from the open offer requirement. This exemption
acknowledges that certain transactions may not significantly impact minority shareholders'
interests.

Consolidation of Holdings: The regulations permit acquirers to consolidate their existing

holdings up to 75% without making an open offer, provided they follow specified conditions.
This encourages existing shareholders to increase their stakes without triggering a mandatory
open offer.

Rights Issues: Special provisions exist for rights issues and preferential allotments made by the
target company. These provisions allow the acquirer to subscribe to such issues without
triggering an open offer obligation, ensuring that companies can raise capital without
hindrance.

Debt Restructuring: The regulations provide for exemptions in cases of debt restructuring and
conversion of debt into equity shares. Acquirers participating in these transactions may be
exempted from making open offers under certain conditions, promoting the restructuring of
distressed companies.

Delisting of Companies: Special provisions pertain to the delisting of companies. If a company

is voluntarily delisted by the promoter, they may be required to make an exit offer to
shareholders, ensuring that minority shareholders have an opportunity to exit the company.

Open Offer Price: The regulations specify the pricing methodology for open offers, which
includes a special provision to determine the offer price in cases where the target company has
made preferential allotments in the preceding 26 weeks.

These exemptions and special provisions are essential to strike a balance between regulatory
oversight and the practicality of conducting corporate takeover transactions. They recognize
that not all acquisitions have the same impact on minority shareholders or market dynamics
and provide flexibility to accommodate various scenarios while upholding the core principles
of fairness and transparency in takeover transactions. Acquirers and target companies must
carefully navigate these provisions to ensure compliance with the SEBI Takeover Regulations
while structuring their transactions effectively.
F. Critical Evaluation of SEBI's Takeover Regulations

The Securities and Exchange Board of India's (SEBI) Takeover Regulations play a pivotal role
in regulating corporate takeovers and change of control transactions in India's securities
markets. While they have contributed significantly to enhancing transparency, protecting
minority shareholders, and promoting corporate governance, a critical evaluation reveals
certain areas of concern and room for improvement.

Positive Aspects:

 Protection of Minority Shareholders: One of the most commendable aspects of SEBI's

Takeover Regulations is their commitment to protecting the interests of minority
shareholders. The regulations ensure that acquirers make fair and equitable offers to all
shareholders, preventing coercive or unfair takeover practices.

 Transparency and Disclosure: SEBI's regulations emphasize transparency and

disclosure, requiring acquirers and target companies to provide comprehensive
information to shareholders and the public. This promotes informed decision-making
and ensures that all stakeholders have access to relevant data.

 Market Stability: The regulations contribute to market stability by preventing excessive

volatility in stock prices during takeover situations. Clear guidelines and thresholds
help maintain orderliness in the market.

 Global Alignment: SEBI has made efforts to align its regulations with international best
practices, which has enhanced India's attractiveness to foreign investors and improved
the country's standing in the global financial community.

Areas of Concern:
  Complexity and Ambiguity: The regulations, while comprehensive, can be complex
and subject to interpretation. This complexity can lead to challenges in compliance,
especially for smaller companies and first-time acquirers.

 Time-Consuming Process: The takeover process in India can be time-consuming due

to regulatory requirements and mandatory waiting periods. Delays can sometimes result
in uncertainty and increased transaction costs.

 Hostile Takeovers: The regulations may not be fully equipped to address hostile
takeover attempts effectively. There may be instances where acquirers exploit
regulatory loopholes or engage in tactics that undermine the spirit of the regulations.

 Limited Flexibility: While the regulations offer exemptions and special provisions,
some stakeholders argue that they could be more flexible to accommodate unique
circumstances, such as distressed companies or innovative financing structures.

G. Impact on corporate governance

SEBI's Takeover Regulations in India have a substantial impact on corporate governance by

promoting transparency, accountability, and fairness in corporate takeover transactions. Here's
a critical evaluation of their impact:

Positive Impact on Corporate Governance:

 Transparency and Disclosure: The regulations emphasize transparency and disclosure

by requiring acquirers and target companies to provide detailed information to
shareholders and the public during takeover transactions. This heightened transparency
ensures that all stakeholders have access to relevant information, enabling them to make
informed decisions.

 Protection of Minority Shareholders: SEBI's regulations place a strong emphasis on

protecting the interests of minority shareholders. Mandatory open offers at specified
 thresholds ensure that minority shareholders are given an exit opportunity at a fair price,
preventing them from being unfairly disadvantaged during change of control situations.

 Board Accountability: The regulations require target companies to provide a formal

recommendation to shareholders regarding the open offer. This recommendation helps
in holding the board accountable for their stance on the takeover and ensures that they
act in the best interests of all shareholders.

 Market Stability: By preventing excessive volatility in stock prices during takeover

attempts, the regulations contribute to market stability. This stability is essential for
maintaining investor confidence and ensuring that the securities markets operate
efficiently.

Challenges and Potential Concerns for Corporate Governance:

 Complexity and Compliance Burden: The regulations can be complex and may impose
a significant compliance burden on companies, particularly smaller ones. Navigating
the intricacies of the regulations may be challenging for some, potentially leading to
delays and increased transaction costs.

 Hostile Takeovers: While the regulations provide a framework for friendly takeovers,
they may not be fully equipped to address hostile takeover attempts effectively. Hostile
acquirers may exploit regulatory gaps or engage in tactics that circumvent the spirit of
the regulations.

 Timing and Delays: The mandatory waiting periods and procedural requirements
prescribed by the regulations can lead to delays in the takeover process. These delays
may create uncertainty and pose challenges for companies and shareholders.

 Flexibility: Some stakeholders argue that the regulations could be more flexible to
accommodate unique circumstances, such as distressed companies or innovative
 financing structures. A more flexible approach could facilitate corporate transactions
while maintaining the principles of corporate governance.

IV. Amendments and Recent Developments

Amendments and recent developments in SEBI's Takeover Regulations have been instrumental
in keeping the regulatory framework aligned with changing market dynamics and international
best practices. Some notable amendments and developments in recent years include:

 SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations,

2017: In 2017, SEBI introduced several amendments to the Takeover Regulations. One
significant change was the reduction in the threshold for making a public announcement
from 25% to 10%. This meant that any acquisition of shares or voting rights exceeding
10% would require the acquirer to make a public announcement and trigger an open
offer.

 Simplified Disclosure Requirements: SEBI has periodically reviewed and simplified

disclosure requirements for open offers. These changes aim to make the process less
cumbersome and encourage more efficient compliance with the regulations.

 Digitalization and E-filing: SEBI has made efforts to digitalize the takeover process,
allowing companies to file documents electronically. This move has streamlined the
submission of documents and improved accessibility for stakeholders.

 Review of Creeping Acquisition: SEBI has periodically reviewed the creeping

acquisition limit (the maximum limit for acquiring shares without triggering an open
offer) and adjusted it to align with market conditions. In 2018, the regulator increased
the creeping acquisition limit from 5% to 10%, making it more flexible for acquirers.
  COVID-19 Related Relaxations: In response to the challenges posed by the COVID-19
pandemic, SEBI temporarily relaxed certain provisions of the Takeover Regulations.
For instance, it extended the timeline for completing open offers due to disruptions
caused by the pandemic.

 Promoter Share Pledging: SEBI has been actively addressing issues related to promoter
share pledging, which can have implications for takeovers. It introduced new disclosure
requirements related to share pledges and their invocation, enhancing transparency for
investors.

 Cross-Border Takeovers: SEBI has taken steps to align cross-border takeover

regulations with international standards, making it easier for foreign investors to
participate in Indian companies' takeovers and acquisitions.

 Proposed Amendments: SEBI has proposed further amendments to the Takeover

Regulations, including changes to the definition of control, threshold limits, and
simplification of certain procedures. These proposed amendments are aimed at
enhancing the ease of doing business and maintaining the integrity of the takeover
process.

V. International Comparative Analysis

An international comparative analysis of SEBI's Takeover Regulations in India in relation to

takeover regulations in other countries reveals both similarities and differences in regulatory
approaches and practices. Here is a brief comparison:

Similarities:

 Disclosure and Transparency: Many countries, like India, emphasize the importance of
disclosure and transparency in takeover regulations. They require acquirers and target
companies to provide detailed information to shareholders and regulatory authorities
during takeover transactions.
  Thresholds for Mandatory Offers: Similar to India, many countries have thresholds that
trigger mandatory open offers. These thresholds are often based on the percentage of
voting rights or shares acquired and are intended to protect minority shareholders.

 Protection of Minority Shareholders: The protection of minority shareholders is a

common theme in takeover regulations worldwide. Regulations in various countries
aim to ensure that minority shareholders are not disadvantaged during change of control
transactions.

 Market Stability: Many countries have provisions in place to prevent excessive

volatility in stock prices during takeover attempts. These provisions help maintain
market stability and investor confidence.

Differences:

 Threshold Levels: The specific threshold levels that trigger mandatory offers vary
significantly from one country to another. For example, while India has a 25% threshold
for mandatory offers, other countries may have different thresholds, such as 30%, 50%,
or more.

 Regulatory Authorities: The regulatory authorities responsible for overseeing takeover

regulations differ from country to country. In some countries, it may be the central bank,
while in others, it could be a dedicated securities regulator.

 Legal Systems: The legal systems and traditions in different countries influence the
design and enforcement of takeover regulations. Common law countries, for example,
may have different regulatory structures compared to civil law jurisdictions.
  Exemptions and Special Provisions: The exemptions and special provisions in takeover
regulations can vary significantly. Some countries may have more extensive
exemptions for specific types of transactions, while others may have fewer exemptions
and a more rigid framework.

 Timeframes: The timeframes for various stages of the takeover process, including offer
periods and regulatory reviews, can differ significantly between countries. Some
jurisdictions may have shorter or longer timelines than India.

 Hostile Takeovers: The treatment of hostile takeovers and the regulatory response to
such situations can vary widely. Some countries may have specific provisions to
address hostile bids, while others rely on general regulatory principles.

Hence, while there are common themes in takeover regulations worldwide, such as the
emphasis on disclosure, transparency, and minority shareholder protection, there are also
notable differences in terms of thresholds, regulatory authorities, legal systems, and specific
provisions. These differences reflect the unique legal and market contexts of each country.
International comparative analysis helps highlight best practices and potential areas for
improvement in takeover regulations, contributing to the ongoing refinement of regulatory
frameworks globally.

VI. Conclusion

Summary of key findings and insights

In examining SEBI's Takeover Regulations in India and comparing them with international
practices, several key findings and insights emerge. These regulations have evolved over the
years to strike a balance between protecting minority shareholders, ensuring transparency, and
facilitating corporate transactions.
One notable finding is the strong emphasis SEBI places on protecting minority shareholders.
The mandatory open offer requirement triggered when a certain threshold is crossed ensures
that minority shareholders have an exit opportunity at a fair price, preventing their disadvantage
during change of control transactions. This serves as a crucial element of investor protection,
aligning with international best practices.

Another significant aspect is the prioritization of transparency and disclosure within these
regulations. They require comprehensive information to be provided to shareholders and the
public during takeover transactions, promoting informed decision-making and ensuring that all
stakeholders have access to relevant data. This adherence to transparency aligns with global
regulatory standards.

SEBI's efforts to align its takeover regulations with international standards have been
noteworthy. This alignment enhances India's attractiveness to foreign investors, contributing
to its position in the global financial community. Cross-border investment is facilitated,
furthering India's economic growth prospects.

However, challenges and areas for improvement also emerge from the analysis. One such
challenge is the complexity of the regulations, which can pose a compliance burden, especially
for smaller companies and first-time acquirers. Navigating the intricacies of the regulations
may be challenging and time-consuming, potentially leading to delays and increased
transaction costs.

The regulations primarily address friendly takeovers, and there may be limitations in
addressing hostile takeover attempts effectively. Hostile acquirers may exploit regulatory gaps
or engage in tactics that circumvent the spirit of the regulations. This underscores the need for
further refinement to address this aspect adequately.

Flexibility is another area for consideration. Some stakeholders argue that the regulations could
be more flexible to accommodate unique circumstances, such as distressed companies or
innovative financing structures. A more flexible approach could facilitate corporate
transactions while maintaining the principles of corporate governance.

The mandatory waiting periods and procedural requirements prescribed by the regulations can
lead to delays in the takeover process. These delays may create uncertainty and pose challenges
for companies and shareholders, warranting a review of the efficiency of the process.
SEBI has also addressed issues related to promoter share pledging, introducing new disclosure
requirements related to share pledges and their invocation. This enhances transparency for
investors and mitigates risks associated with share pledges.

The digitalization of the takeover process through e-filing has streamlined document
submission and improved accessibility for stakeholders, enhancing efficiency and reducing
paperwork.

SEBI's willingness to propose amendments and respond to market dynamics reflects its
commitment to continuously refine the regulations. This responsiveness ensures that the
framework remains relevant and effective in the evolving financial landscape.

In conclusion, SEBI's Takeover Regulations in India have had a notable impact on corporate
governance by emphasizing transparency, protecting minority shareholders, and promoting
board accountability. However, they are not without their challenges, including complexity,
compliance burdens, and limitations in addressing hostile takeovers effectively. A critical
evaluation underscores the need for ongoing refinement to strike the right balance between
regulatory oversight and facilitating corporate transactions while upholding the principles of
corporate governance. As SEBI continues to adapt its regulations, it will play a pivotal role in
shaping India's securities markets and attracting investments in the years ahead.

VII. References

 Background and significance of SEBI's takeover regulations

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https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Ma%20Lab/Takeover%20Code%20Dissected.pdf

Mondaq, "Substantial Acquisition of Shares and Takeover: SEBI Regulations 2011 - Overview,"
https://www.mondaq.com/india/shareholders/754950/substantial-acquisition-of-shares-and-take-over-sebi-
regulations-2011-overview

 Overview of SEBI as the regulatory authority

Securities and Exchange Board of India, "About SEBI," https://www.sebi.gov.in/about-sebi.html

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objective-functions-sebi/

 Historical evolution of takeover regulations in India

iPleaders, "[Title of the Blog Post]," https://blog.ipleaders.in/takeover-regulations-india/

 SEBI Takeover Code: Key Provisions

iPleaders, "[Title of the Blog Post]," https://blog.ipleaders.in/requirements-per-takeover-code/

PwC India, "[Title of the Document]," https://www.pwc.in/assets/pdfs/services/m-a-takeover-book-final-

lowres.pdf

Vinod Kothari & Company, "Decoding the Takeover Code," https://vinodkothari.com/wp-

content/uploads/2014/01/Decoding-the-Takeover-Code.pdf

Economic Times, "SEBI Takeover Code to Help M&As," https://economictimes.indiatimes.com/sebi-takeover-

code-to-help-mas/articleshow/1838665.cms?from=mdr

 Threshold limits for open offers

Securities and Exchange Board of India, "SEBI FAQ on Takeover Regulations (March 2022),"
https://www.sebi.gov.in/sebi_data/faqfiles/mar-2022/1648620806406.pdf

Singhania & Partners LLP, "Exemptions Under the Takeover Code," https://singhania.in/blog/exemptions-
under-the-takeover-code

Moneylife, "SEBI Notifies New Takeover Norms: Open Offer Trigger at 25%,"
https://www.moneylife.in/article/sebi-notifies-new-takeover-norms-open-offer-trigger-at-25-
percentage/20034.html

 Mandatory and voluntary open offers

iPleaders, "Distinguishing Mandatory and Voluntary Offer," https://blog.ipleaders.in/distinguishing-mandatory-

voluntary-offer/

TaxGuru, "Obligations under Takeover Code – A Detailed Overview," https://taxguru.in/sebi/obligations-

takeover-code-detailed-overview.html

iPleaders, "Comparative Study Between Mandatory Offer and Voluntary Offers,"

https://blog.ipleaders.in/comparative-study-between-mandatory-offer-and-voluntary-offers/

 Disclosure and transparency requirements

Comptroller and Auditor General of India, "Chapter 6: Disclosure and Transparency in Fiscal Operations of
Report No. 20 of 2018 - Compliance of the Fiscal Responsibility and Budget Management Act, 2003,"
https://cag.gov.in/uploads/download_audit_report/2018/Chapter_6_Disclosure_and_Transparency_in_fiscal_op
erations_of_Report_No_20_of_2018_Compliance_of_the_Fiscal_Responsibility_and_B.pdf

 Exemptions and special provisions

Singhania & Partners LLP, "Exemptions Under the Takeover Code," https://singhania.in/blog/exemptions-
under-the-takeover-
code#:~:text=Exemption%20by%20SEBI%20under%20Regulation,compliance%2C%20if%20it%20deems%20
fit

iPleaders, "Exemptions Provisions Under Takeover Code," https://blog.ipleaders.in/exemptions-provisions-

under-takeover-code/
Securities and Exchange Board of India, "SEBI Takeover Regulations," https://www.sebi.gov.in/acts/tkreg.html

Securities and Exchange Board of India, "Format 6: Declaration of Acquisition of Shares and Takeovers,"
https://www.sebi.gov.in/sebi_data/commondocs/Format_6_p.pdf

 Critical Evaluation of SEBI's Takeover Regulations

Legal Service India, "[Title of the Article]," https://www.legalserviceindia.com/article/l183-Takeovers.html

International Journal of Legal Medicine and Healthcare, "[Title of the Paper],"

https://www.ijlmh.com/paper/critical-analysis-ma-takeover-code/

Securities and Exchange Board of India, "[Title of the Document],"

https://www.sebi.gov.in/sebi_data/attachdocs/1321590393848.pdf?QUERY

Sage Journals, "[Title of the Paper]," https://journals.sagepub.com/doi/pdf/10.1177/0256090920100402

 Impact on corporate governance

National University of Juridical Sciences Law Review, "[Title of the Paper]," http://nujslawreview.org/wp-
content/uploads/2018/06/11-2-Bhavya-Nahar-1.pdf

Can Fin Homes Ltd., "Corporate Governance Policy 2021," https://www.canfinhomes.com/pdf/Corporate-

Governance-Policy-2021.pdf

 Amendments and Recent Developments

IndiaCorpLaw, "[Title of the Article]," https://indiacorplaw.in/2022/01/sebis-takeover-amendment-hit-and-

miss-on-delisting.html

AZB & Partners, "[Title of the Article]," https://www.azbpartners.com/bank/amendments-to-sebi-sast-

regulations/

The Hindu Business Line, "[Title of the Article]," https://www.thehindubusinessline.com/markets/stock-

markets/sebi-tweaks-takeover-code-to-facilitate-strategic-disinvestment-of-psus/article66123212.ece

Argus Partners, "[Title of the Article]," https://www.argus-p.com/updates/updates/sebi-amends-the-takeover-

code/

TaxGuru, "[Title of the Article]," https://taxguru.in/sebi/analysis-amendments-sebi-takeover-code-light-covid-

19.html

 International Comparative Analysis

ResearchGate, "[Title of the Paper],"

https://www.researchgate.net/publication/228202030_Comparing_Takeover_Laws_in_the_UK_India_and_Sing
apore

SSRN (Social Science Research Network), "[Title of the Paper],"

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1753341

iPleaders, "[Title of the Blog Post]," https://blog.ipleaders.in/comparative-analysis-of-the-takeover-code-in-

india-and-the-uk/

JSTOR, "[Title of the Paper]," https://www.jstor.org/stable/24872278