INDIA Law and Practice Contributed by: Kunal Chandra, Kabeer Mathur, Chinmay Bilgi, Sharnam Vaswani and Rajdeep Mukherjee, Trilegal
4. Stakebuilding 4.1 Principal Stakebuilding Strategies Stakebuilding in listed Indian companies prior to launching an offer is constrained by structural and regulatory factors. Chief among them are the share - holding structures prevalent in listed Indian compa - nies – promoter groups frequently retain substantial holdings and large institutional investors often hold significant stakes. Investors seeking significant stakes typically negotiate with promoters or other significant shareholders rather than accumulating shares gradu - ally through the open market. In addition, the Takeover Regulations impose dis - closure requirements (discussed in 4.2 Material Shareholding Disclosure Threshold ) and open offer thresholds which inhibit creeping acquisitions. Under the Takeover Regulations, an acquirer is required to make a mandatory open offer upon: (a) acquiring 25% or more of the voting rights in a listed company; or (b) acquiring control, irrespective of shareholding. The open offer must be made at a price prescribed under the Takeover Regulations to acquire at least a further 26% of the total shares of the target company from public shareholders. Following the initial acquisition and open offer, an acquirer holding 25% or more may acquire up to 5% additional shares in a financial year without triggering a further open offer under the creep - • Open market purchases: carried out on stock exchanges and typically used to acquire initial nominal holdings; • Block trades: with institutional shareholders, allow- ing larger parcels of shares to be acquired off- exchange in a single transaction; and • Negotiated off-market transactions: with promot - ers or other significant shareholders, which are the most common route to acquiring a controlling or significant minority stake in an Indian listed com - pany. Stakebuilding strategies must also consider other regulatory constraints, including foreign investment ing acquisition mechanism. Stakebuilding Mechanisms Stakebuilding typically occurs through:
ground/user segments; (ii) up to 49% via the auto - matic route for launch vehicles and spaceports; and (iii) up to 100% via the automatic route for manufac - turing of components and subsystems for satellites and ground/user segments. These reforms reflect a broader policy direction to attract foreign capital into sectors previously reserved for domestic participation. Acquisition Financing In February 2026, the RBI introduced a framework per - mitting banks to finance acquisitions of equity shares and compulsorily convertible instruments, including limited refinancing as part of the transaction struc - ture. This is an important shift from the earlier regime, where acquisition financing was largely dependent on offshore lenders and private credit, and is expected to expand domestic funding options, improve deal exe - cution and deepen India’s leveraged finance market. 3.2 Significant Changes to Takeover Law Takeovers of listed companies in India continue to be governed by the Takeover Regulations. Over the past 12 months, there have been no major legislative amendments to the core framework of the regulations, and the fundamental principles governing acquisi - tions of voting rights and control in listed companies – including the mandatory open offer threshold and minimum offer size – remain unchanged. During this period, SEBI has issued clarifications and operation - al guidance on procedural aspects of the takeover regime in order to improve transparency and stream - line disclosure practices rather than introduce sub - stantive changes to the regulatory structure. (Refer to 4.1 Principal Stakebuilding Strategies .) Looking ahead, SEBI periodically reviews the takeo - ver framework in light of evolving market practices, and several areas remain the subject of discussion and regulatory attention, including: (a) the concept of “control” under the Takeover Regulations in view of court and tribunal rulings – a subject of sustained judi - cial and regulatory debate; (b) refinements to pricing methodologies for open offers for infrequently traded shares; (c) alignment of disclosure obligations with the SEBI (Listing Obligations and Disclosure Require - ments) Regulations, 2015 (“SEBI LODR”); and (d) indi - rect acquisitions through complex holding structures.
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