Voluntary Open Offer

The Concept of Voluntary Open Offer was not unknown and in the past there are number of Voluntary Open Offers, but there were no separate provisions governing the Voluntary Open Offers in SEBI (SAST) Regulations, 1997. However the New SEBI Takeover Regulations i.e. SEBI (SAST) Regulations, 2011 specifically deals with the Voluntary Open Offer

Voluntary Open Offer” means Open Offer given by the acquirer voluntarily without triggering the mandatory Open Offer obligations as envisaged under SEBI (SAST) Regulations, 2011. Generally, the purpose of giving Voluntary Open Offer is to consolidate the shareholding.
Regulation 6 of SEBI (SAST) Regulations, 2011 deals with the concept of Voluntary Open Offer and provides the eligibility, conditions and restrictions with respect to the same that are detailed below:

Eligibility for making Voluntary Open Offer

  • Acquirer along with PACs should be holding atleast 25% or more shares in the Target Company prior to making voluntary Open Offer. 
  • The Acquirer or PACs have not acquired any shares of the Target Company in the preceding 52 weeks without attracting the Open Offer obligation.
Voluntary Open OfferConditions for making Voluntary Open Offer:
  • The aggregate shareholding after completion of the Voluntary Open Offer should not exceed beyond the maximum permissible non-public shareholding.

Note: Maximum permissible non-public shareholding means such percentage shareholding in the target company excluding the minimum public shareholding required under the listing agreement 
  • No acquisition during the offer period except under the Voluntary Open Offer.


The acquirer becomes ineligible to acquire further shares for a period of six months after the completion of Open Offer except by way of: 
  • Another Voluntary Open Offer; 
  • Acquisitions by making a competing offer
For Instance:

SwarajAutomotives Limited (Target Company)

Mahindra and Mahindra Limited (Acquirer) forms part of the promoter group of the Target Company and holds 10,59,543 Equity Shares constituting 44.19% of the Voting Share Capital of Target Company. For the purpose of consolidation of shareholding, the Acquirer had made the Voluntary Open Offer to acquire upto 27% of the voting share capital of the Target Company. Pursuant to the Offer, the total shareholding of the Acquirer increased to 71.19% of the Voting Share Capital of the Target Company.

For any professional query, please contact:
Ms. Divya Vijay

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