INDIA Law and Practice Contributed by: Kunal Chandra, Kabeer Mathur, Chinmay Bilgi, Sharnam Vaswani and Rajdeep Mukherjee, Trilegal
agreements (SHAs). In acquisitions involving listed companies, the commercial terms agreed between the acquirer and significant shareholders are typically documented in definitive agreements such as SPAs, which is the trigger for open offer where thresholds under the Takeover Regulations are met. The open offer itself is governed by a separate statutory disclo - sure framework, including the public announcement, Detailed Public Statement (DPS) and letter of offer filed with SEBI and the stock exchanges, which set out the terms and conditions of the tender offer to public shareholders. In unlisted company acquisitions, the SPA is the princi - pal document. Where the acquirer is also subscribing to newly issued shares, an SSA is executed alongside the SPA. Transactions involving the transfer of a busi - ness undertaking are typically documented through a BTA or slump sale agreement. Multi-entity reorganisa - tions and mergers are usually implemented through schemes of amalgamation or arrangement approved by the NCLT. Where existing investors/shareholders continue to hold stakes alongside an incoming inves - tor, an SHA is commonly executed to regulate govern - ance rights, transfer restrictions and exit mechanisms. 6. Structuring 6.1 Length of Process for Acquisition/Sale Unlisted company acquisitions can generally be com - pleted relatively quickly once due diligence and trans - action documentation are finalised, particularly where the target operates in an unregulated sector and no specific regulatory approvals are required. In contrast, acquisitions involving listed companies typically take longer because crossing the prescribed shareholding threshold of 25% triggers a mandatory open offer to public shareholders under the Takeover Regulations. The open offer process usually takes three to four months, and completion of the underlying acquisi - tion generally occurs after the open offer process has concluded. Timelines may also be affected where the target oper - ates in regulated sectors, such as banking or non- banking financial services, where approvals from sec - toral regulators (for example, the RBI) may be required
before the transaction can be completed. In addition, transactions meeting the relevant thresholds under competition law must obtain clearance from the CCI, which may further extend the timeline. (Refer to 2.4 Antitrust Regulations .) 6.2 Mandatory Offer Threshold Acquisitions involving listed companies are subject to the mandatory open offer framework under the Takeover Regulations. An acquisition resulting in the acquirer holding 25% or more of the voting rights in a listed company triggers a mandatory open offer to acquire at least a further 26% of the aggregate share capital from public shareholders. In addition, acquisi - tions that result in a change of control may trigger an open offer requirement even where the shareholding threshold is not crossed. (Refer to 4.1 Principal Stake- While cash consideration is most prevalent, consid - eration may also be structured in non-cash forms, including security swaps, transfers of assets including physical assets, receivables and intellectual property, or a combination of cash and non-cash components. The non-cash components are subject to statutory valuation requirements. building Strategies .) 6.3 Consideration In transactions involving unlisted companies, parties frequently use mechanisms such as deferred con - sideration and earn-outs to bridge valuation gaps and align payouts with future performance. Valuation differences are also addressed through adjustment mechanisms, most commonly working capital adjust - ments or locked-box structures, particularly in sec - tors where earnings visibility or asset valuation may be uncertain. Warranty and indemnity (W&I) insurance is also gain - ing traction in the Indian M&A market as a tool for risk allocation and to enable cleaner exits for sellers with - out extended liability or reliance on escrows. Improved diligence standards and disclosure practices have also enabled insurers to offer broader coverage, more flexible terms and competitive pricing, making W&I insurance increasingly accessible, including in mid- market transactions.
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