INDIA Law and Practice Contributed by: Kunal Chandra, Kabeer Mathur, Chinmay Bilgi, Sharnam Vaswani and Rajdeep Mukherjee, Trilegal
6.4 Common Conditions for a Takeover Offer Under the Takeover Regulations, open offers may have limited conditionalities. While regulatory approv - als (eg, CCI clearance, sector-specific licences) and third-party lender consents are standard conditions precedent for open offer transactions, acquirers may not include other subjective or discretionary condi - tions. The withdrawal of an open offer is permitted only in limited circumstances, such as where a required statutory approval is refused or a disclosed condition beyond the acquirer’s control is not satisfied. 6.5 Minimum Acceptance Conditions An acquirer may structure an open offer to be con - ditional upon achieving a specified minimum level of acceptance from public shareholders. This is typical - ly considered where the acquirer seeks to reach the holding thresholds that confer additional shareholder rights under the Companies Act, 2013. For instance, a shareholding of over 50% enables the acquirer to pass ordinary resolutions (such as appoint - ment of a director or issuance of bonus shares) and exercise control over day-to-day operations. A share - holding in excess of 75% allows the acquirer to pass special resolutions, which are required for key deci - sions such as amendments to constitutional docu - ments, capital restructuring and certain corporate actions. A 90% or above shareholding enables the acquirer to undertake minority squeeze-out mecha - nisms and achieve near-complete ownership. Accordingly, minimum acceptance conditions are often linked to these thresholds, depending on the acquirer’s strategic objective. Where the offer is con - ditional, the terms of the underlying transaction must provide that if the minimum acceptance level is not achieved, the acquirer will not acquire any shares under the open offer and the triggering transaction will not proceed. In such cases, the offer effectively lapses due to non-fulfilment of the stated condition, rather than being withdrawn. 6.6 Requirement to Obtain Financing In India, a public takeover cannot be made conditional upon the bidder obtaining financing. Prior to issuing a public announcement, SEBI mandates that the acquir - er establish firm financial arrangements and deposit
a prescribed sum into an escrow account (via cash or bank guarantee) to unconditionally prove its ability to fulfil the payment obligations of the open offer. Recent regulatory developments have begun to expand the role of acquisition financing in the Indian M&A market. In February 2026, the RBI introduced a framework permitting commercial banks to provide credit facilities to fund acquisitions of equity shares or compulsorily convertible debentures of target companies. The framework also permits refinancing of existing acquisition debt and, in certain cases, refi - nancing of the target’s outstanding borrowings where such refinancing forms part of the acquisition struc - ture. This represents a significant shift from the earlier regulatory position under which acquisition financing by domestic banks was limited, resulting in many leveraged transactions relying on offshore lenders or credit funds. For M&A transactions involving unlisted targets, financing conditions are permissible and routinely included in SPAs, particularly where the acquisition involves leveraged finance or where the acquirer’s funding source is dependent on a parallel process. 6.7 Types of Deal Security Measures Bidders routinely secure interim operating covenants, non-solicitation clauses and strict exclusivity periods to protect the transaction. Break-up fees are rarely utilised and difficult to enforce; Indian courts routinely classify them as unenforceable penalty clauses unless actual damages are proven. Recent regulatory chang - es, particularly the CCI’s shortened 150-day maximum review period, have positively impacted interim time - lines by accelerating clearance predictability. 6.8 Additional Governance Rights If seeking less than 100% ownership, acquirers negoti - ate minority protection and governance rights through shareholders’ agreements. These universally include board nomination rights, veto rights on reserved mat - ters and rights to nominate key managerial personnel, approval of business plans and extensive information covenants. For listed targets, the SEBI LODR rules require any special governance rights to be approved by a special resolution of the shareholders prior to their exercise and at five-year intervals thereafter.
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