What Is an Open Offer? SEBI SAST Explained
An open offer is a mandatory bid an acquirer must make to a listed company's public shareholders once the acquirer crosses a defined ownership threshold. The idea is fairness: if someone is taking a large or controlling stake, ordinary shareholders should get a chance to sell at a regulated price rather than being left in a company whose control has changed around them. In India, the open offer rules live in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, usually called the SAST Regulations or the takeover code.
Definition
An open offer
is a mandatory offer an acquirer makes to a listed Indian company's public shareholders. It is triggered on crossing 25% of voting rights (Regulation 3(1)), on adding more than 5% in a financial year while holding 25% or more (Regulation 3(2)), or on acquiring control (Regulation 4). It must cover at least 26% (Regulation 7). Source: SEBI SAST Regulations, 2011.
What triggers an open offer?
The SAST Regulations set out a few clear triggers. An acquirer must make an open offer when any of these happen:
- Crossing 25% of voting rights. Acquiring shares that take holding to 25% or more triggers a mandatory offer under Regulation 3(1).
- Creeping acquisition above 5%. A holder already between 25% and 75% who acquires more than 5% of voting rights in a financial year triggers an offer under Regulation 3(2).
- Acquiring control. Taking control of the company, regardless of the exact stake, is a trigger under Regulation 4.
25%
Voting-rights threshold that triggers a mandatory open offer
Source: SEBI SAST Regulations, 2011, Regulation 3(1)
How big is an open offer, and at what price?
A mandatory open offer must be for at least 26% of the target company's total shares, under Regulation 7. The offer price is set by a formula in Regulation 8 that takes the highest of several parameters, including the negotiated deal price, the acquirer's own purchases over 52 and 26 weeks and the 60 trading day volume-weighted market price, so public shareholders are not offered less than the acquirer effectively valued the shares at; see the open offer price calculation for each parameter. The exact floor price is disclosed in the offer documents the acquirer files, on the deadlines set out in the open offer timeline, and what the acquirer may pay with is governed separately by the open offer mode of payment rules.
Why open offers matter when you read filings
An open offer is a public event with a paper trail. It signals a change in ownership or control that will show up in the company's shareholding pattern, and it can coincide with large trades reported as bulk or block deals. Watching who is crossing thresholds tells you how the ownership of a company is shifting, on the record.
Do you have to participate in an open offer?
No. An open offer gives public shareholders a choice, not an obligation. You can tender your shares at the offer price or keep holding. It also does not tell you whether the underlying company is a good or bad holding, only that an acquirer is buying at a stated price. That is context, not a recommendation, and it sits alongside other ownership signals such as promoter pledging.
Flock tracks the ownership changes behind open offers from the exchange filings, dated and source-linked. What any of it means for you is your call to make.
Frequently asked questions
What triggers a mandatory open offer in India?
Under the SEBI SAST Regulations, 2011, an acquirer crossing 25% of voting rights must make an open offer. So must a holder of 25% or more, below the maximum permissible non-public shareholding, who acquires more than 5% in a financial year, or anyone acquiring control. Source: SEBI SAST Regulations, 2011.
How large must an open offer be?
A mandatory open offer must be for at least 26% of the target company's total shares, under Regulation 7 of the SEBI SAST Regulations, 2011. This gives public shareholders a meaningful chance to exit at the offer price. Source: SEBI.
Do I have to sell my shares in an open offer?
No. An open offer is an offer, not a compulsion. Public shareholders can tender their shares at the offer price or hold. Whether to participate is a personal decision based on your own view. Source: SEBI SAST Regulations, 2011.
Flock tracks these filings, sourced, dated, and linked back to the original. See what smart-money entities disclosed, without the guesswork about what it means.
Disclosures shown are public regulatory filings. Data may be delayed or incomplete. Smart-money entities may no longer hold positions shown. Not investment advice.