If you have any doubts that the SEBI takeover regulations are a royal mess, check out the following chart, which tries to unravel the mind numbing complexity (and nearly all of it wholly pointless complexity) in the trigger for a compulsory tender offer. To add to this sad story is the sadder story of regulations being changed almost every moment (SEBI regulations incidentally need to be tabled before the parliament, and thus ought to have some level of permanence). Even as I type this blog post, another amendment is in the works, or rather in the press. So which is worse? Between the two, in my opinion, the frequent changes make the worse story – though there is no reason why both don’t need to improve. If there is no philosophy behind a regulation, it is bound to be changed frequently and randomly – it’s like the adage, if you don’t have a destination, any road will take you. Witness, the US regulations have virtually not been touched in the last 40 years since their introduction.
Note: the chart below will be inaccurate in a few days time. Note also that this is not a comprehensive chart.
| Prior holding (%) | Acquisition (%) | Post acquisition holding (%) | Is a compulsory tender offer triggered (?) |
| 0 | 5 | 5 | No |
| 0 | 14.99 | 14.99 | No |
| 0 | 15 | 15 | Yes |
| 10 | 4.99 | 14.99 | No |
| 10 | 5 | 15 | Yes (though absurd because a 5% acquisition with 15% holding is exempt) |
| 14 | 5 | 19 | Yes (also absurd) |
| 15 | 5 in one year | 20 | No |
| 15 | 6 in one year | 21 | Yes |
| 49.99 | 5 | 54.99 | No |
| 50 | 5 | 55 | Yes |
| 55 | One share (not through open market purchase or buy back) | 55 + One share | Yes |
| 55 | One Share (through open market purchase or buy back) | 55 + One share | No |
| 60 | Consolidation by tender offer | 75% or 90% (depending on the min public shareholding | Yes, but offer can be for less than 20% |
| 70 | 4.99 (through open market purchase or buy back) | 74.99 | No |
| 75 | One share (where minimum public shareholding per listing agreement is 10%) | 75 + One share | Yes |
| 75 | One share (where minimum public shareholding per listing agreement is 25%) | 75 + One share | Prohibited |
| 85 | One share (where minimum public shareholding per listing agreement is 10%) | 85 + One share | Yes |
| – | Change of control | – | Yes |
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