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The open offer is thus a fancy legal terminology to describe the takeover offer whereby to acquire another listed company (Target) an acquirer has to propose an offer to its existing shareholders to sell their shares at an offer price determined by the acquirer. The open offer is to be made vide a public announcement and kept open for some 30 days (a month) from the date of its notification. Such an offer is obligatory and must be made to the public shareholders allowing them a fair exit. The offer size needs to be a minimum of 26% of the total equitable share capital. When the acquirer together with PAC (Persons acting in concert) holds a certain stake in the company but wishes to acquire additional share or voting rights such that the number of their shareholding combinedly, exceeds the threshold of 25% in the target company (as per the amended regulation of 2011), then to acquire additional shares the open offer obligation gets triggered.
#Method map of escrow process code
What is an open offer?Īn Open offer under the Takeover Code is an obligation as per the SEBI SAST (Substantial Acquisition of Shares & Takeover) Regulation. This article will cover what an open offer is, why it is required and when it gets triggered along with a step-by-step roadmap of an open offer process for acquiring an entity following the (SAST) takeover code. For this article, the discussion of such powers and obligations shall be restricted to the open offer and its process.
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Nowadays owing to the frequency of mergers and acquisitions the requirement of well-defined rules comes into play and that is where SEBI the Securities and Exchange Board of India exerts its powers.