- within Corporate/Commercial Law topic(s)
- with Senior Company Executives, HR and Finance and Tax Executives
- in United States
- with readers working within the Accounting & Consultancy and Construction & Engineering industries
Introduction
In India, mergers and acquisitions (M&A) landscape has undergone through evolution over the years, with the Securities and Exchange Board of India (SEBI) playing a important role in supervision, regulation and maintaining openness and fairness. SEBI in the year 2011 enacted SEBI (Substantial Acquisition of Shares and Takeovers) Regulations or also known as SEBI Takeover Code for the purpose of protecting the minor shareholders in a company in an event of acquisition or merger or when an investor is proposing to buy a large number of shares in the company. Over the years there have been amendments made in the regulations by SEBI to Strengthen the acquisition laws. Latently in 2025, SEBI made significant changes to the takeover framework, often known as the SEBI takeover code 2025, with the purpose of harmonizing current law in motion, boost transparency and increasing investor protection.
These developments are especially important for acquirers, promoters, etc. engaged in takeovers and acquisitions.
Background of SEBI Takeover Code
In year 2011, SEBI formulated and enacted the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations or also known as SEBI Takeover Code for the purpose of regulating the acquisitions and protecting the shareholders of the targeted listed company. The regulation was formulated to govern the acquisition by a person who shall be known as an acquirer whether individually or with the assistance of a person acting in concert (PAC) with the intention to either acquire shares or voting rights or the control of a targeted company's policy making decisions, managerial control or any such nature of control. The primary objective of the Takeover Code other than regulating acquisition activities is to ensure that shareholders are treated fairly during substantial acquisitions and are provided with an exit opportunity when control of a company changes. This means that the existing shareholders will be provided with an opportunity to exit the company by selling the shares to the acquirer or can remain invested. The acquirer has to provide a public offer for the same to inform the existing shareholders of the targeted listed company about the acquirer's plan of acquiring the shares or voting rights or control. In some situation provision of offer letter is a must whereas in some case it is optional. Over time, SEBI has amended these regulations to address market conditions, close regulatory gaps, and improve compliance in takeover transactions.
What's New in the SEBI Takeover Code 2025?
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 was amended in the year 2025 and the new regulations was issued on 3rd December,2025 wherein the regulation shall be renamed as Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2025 or SEBI takeover code 2025. The changes introduced by SEBI are briefly described as follows:
- A new clause (zaa) in Regulation 2(1) defining 'valuer' is added.
- The primary focus of these amendments is the formalization of the role of Independent Registered Valuers. Where earlier to decide the valuation i.e. process of determining the price on which the acquirer will purchase the share during open offers was on the discretion of the acquirer and merchants bankers but now the same role is given to an independent person who shall be known as Registered Valuers. The Valuer mentioned in the amended regulation is same valuer as described in section 247 of the Companies Act, 2013.
- A time period of nine months is provided to the acquirers and merchant bankers who were indulge in ongoing valuation process before the amended regulation came into force to complete the overall valuation process.
- Under Regulation 8(4) that expound about the situation where offer price cannot be calculated with the standard formula, now must be decided by an independent valuer and on the basis of Book Value, Comparable trading multiples, other parameters.
- Under Regulation 8(16) now SEBI can order for valuation through an independent valuer and the cost for the same is to be borne by the acquirer. In such case also, a time period of nine months is provided to the acquirers and merchant bankers who were indulge in ongoing valuation process before the amended regulation came into force to complete the overall valuation process.
- Under Regulation 9(5)(c) that expound about valuation in indirect acquisition / consideration other than cash where earlier valuation could be certified by Merchant Banker or CA having an experience of 10 years, now will be done by an independent registered valuer.
Below is a brief explanation of the pre-existing regulations and the amendments introduced in 2025:
| Aspect | Before Amendment (Pre-Dec 2025) | After Amendment (SEBI Takeover Code 2025) |
|---|---|---|
| Offer Price Valuation | The offer price was determined by the acquirer along with the manager to the open offer. | The offer price is required to be determined by an independent registered valuer in accordance with Section 247 of the Companies Act, 2013. |
| Infrequently Traded Shares | In this case the price was determined by the acquirer and the manager to the open offer. | The offer price is required to be determined by an independent registered valuer thereby removing discretion of the acquirer. |
| Indirect Acquisitions | Loopholes allowed indirect buys without full open offer triggers and lighter disclosures were there. | Such loopholes have been tightened, ensuring that indirect acquisitions are properly disclosed and open offer obligations are more effectively enforce |
| Disclosures & Compliance | Information about future plans after acquisition and how the deal would be funded was not very detailed, and checks by stock exchanges were limited. | Acquirers must now clearly disclose their post-acquisition plans and funding details to stock exchanges, with stricter checks to ensure compliance with the SEBI Takeover Code 2025. |
| Non-Cash Consideration | Limited guidance on using listed securities as payment. | Valuer must certify fair value, boosting minority shareholder protection in acquisitions. |
The Need of the Reform
The latest amendments were made in the existing SEBI Takeover Codes so as to strengthen the overall process of acquisition and takeover. The purpose being enactment of SEBI Takeover Codes,2025 is to clearly protect the minority shareholders from the acquirer's power to control the offer price and ensure a fair process with a full accountability. Earlier where prices were predetermined by the acquirer now the same will be decided by the Valuer who shall work independently and should be qualified as mentioned under section 247 of Companies Act, 2015. The new regulation is enacted for the purpose of boosting disclosures so as to follow a strict compliance of the regulations.
Conclusion
The Security Exchange Board Of India or SEBI overlooks the function of protecting the investors in the market and for this purpose, it keeps on updating the existing regulations. The earlier existing SEBI Takeover Codes were amended to protect the shareholders of a targeted listed company so that a fair process of acquisition and takeover can be concluded. The new regulation strengthens the norms and has an objective to function for the benefit of minority shareholders in a company. Thus, the amended SEBI Takeover codes,2025 shall felicitate the purpose of smooth, fair acquisition and takeover.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
