Committee of Independent Directors in an Open Offer

The committee of independent directors in an open offer is the target company's own answer to a bid, and it is a published document rather than a boardroom view. Regulation 26(6) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, read in the consolidation last amended on 5 December 2025 (re-read on 7 October 2026, when SEBI's regulations page still listed that consolidation as the latest and its PDF matched the copy read on 21 September 2026), requires the board of the target company, upon receipt of the detailed public statement, to constitute a committee of independent directors to provide reasoned recommendations on the open offer, and requires the target to publish them. Since 5 May 2021 the committee must also disclose how it voted.

What must the committee of independent directors publish in an open offer?

Regulation 26(7) fixes the form and the deadline. The committee provides its written reasoned recommendations to the shareholders of the target company, and those recommendations are published in such form as SEBI specifies, at least two working days before the commencement of the tendering period, in the same newspapers where the public announcement of the open offer was published. Copies go simultaneously to:

• SEBI;
• every stock exchange on which the target's shares are listed, which must forthwith disseminate them; and
• the manager to the open offer, and where there are competing offers, the manager for every competing offer.

Two features make this more useful than a routine board statement. The committee is "entitled to seek external professional advice at the expense of the target company" under the first proviso to Regulation 26(6), so the recommendation can be backed by an adviser the target paid for. And the second proviso, inserted with effect from 5 May 2021, requires the committee to disclose "the voting pattern of the meeting in which the open offer proposal was discussed". A split committee is now visible as a split committee.

What else is the target board restricted from doing?

The committee sits inside a wider set of obligations in Regulation 26. On a public announcement being made, Regulation 26(1) requires the board to ensure that during the offer period the business "is conducted in the ordinary course consistent with past practice". Regulation 26(2) then lists six things neither the target nor its subsidiaries may do without a special resolution of the target's shareholders passed by postal ballot:

1. alienate material assets by sale, lease, encumbrance or otherwise, or agree to, outside the ordinary course of business;
2. take material borrowings outside the ordinary course of business;
3. issue or allot authorised but unissued securities carrying voting rights, subject to carve-outs for conversions of pre-announcement convertibles, a public issue whose red herring prospectus was already filed, and a rights issue whose record date was already announced;
4. buy back shares or otherwise change the capital structure;
5. enter into, amend or terminate material contracts outside the ordinary course, whether or not with a related party; and
6. accelerate any contingent vesting, including under employee stock options.

Regulation 26(3) extends the discipline downward: in a general meeting of a subsidiary on any of these matters, the target and its subsidiaries must vote consistently with the special resolution its own shareholders passed. Regulation 26(4) bars the target from fixing a record date for any corporate action from the third working day before the tendering period until the tendering period expires, which is why a dividend or bonus record date will not land mid-offer.

What the target has to hand over, and when

Four cooperation duties sit at the end of Regulation 26:

• The shareholder list. Within two working days from the identified date, the target must give the acquirer a list of shareholders from the register of members with names, addresses, shareholding and folio numbers, in electronic form where available, plus a list of pending transfer applications. The acquirer reimburses reasonable external-agency costs.
• Verification of tendered shares. Regulation 26(8) requires the target's board to facilitate the acquirer in verifying the shares tendered in acceptance of the open offer.
• Even-handedness in a contest. Under Regulation 26(9) the board must make available to every acquirer making a competing offer any information and cooperation it gave to any other competing bidder.
• Registration of transfers. Once the acquirer has met the conditions, Regulation 26(10) requires the board to register the transfer of shares acquired in physical form without delay.

One related restriction sits a regulation earlier. Regulation 24(1) bars anyone representing the acquirer from joining the target's board during the offer period, subject to a proviso allowing it after an initial fifteen working days from the detailed public statement if the acquirer deposits the entire open offer consideration in cash in the escrow account. Where the offer is conditional on a minimum level of acceptances, Regulation 24(2) bars the appointment outright regardless of the escrow.

How to read the recommendation alongside the rest of the offer

The committee's recommendation is a dated exchange filing, published two working days before tendering opens, and it is one of the few documents in a takeover written by someone other than the bidder. Flock's filing week page lists the SAST disclosures, insider trades and bulk deals filed over the trailing seven days by the investors Flock tracks, each with its filing date and a link to the exchange disclosure. Read next to the recommendation: the acquirer's dated SAST disclosures, the price floor in the open offer price calculation, and where the whole thing sits in the open offer timeline.

Flock reports these filings with their dates and links back to the exchange record. What a committee of independent directors recommended in an open offer, and what weight you give it, is your call to make. This is not investment advice.