SEBI Clarifies Timing of Acquisition Under SAST Regulations

‘Informal Guidance No. O/CFD/PoD-1/OW/P/2025/16482/1; Dated: 19.06.2025

The Securities and Exchange Board of India (SEBI) has issued an informal guidance clarifying the interpretation of the term ‘acquisition’ under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations). The clarification was sought by a target company in relation to the timing of acquisition for regulatory compliance.

1. Query Raised – Timing of Acquisition

The company sought guidance on whether an acquisition of shares should be considered as occurring:

• In the financial year when the agreement or purchase order is placed (contracted); or
• In the financial year when the delivery of shares is completed (executed/settled).

2. SEBI’s Clarification – Inclusion of Prospective Acquisitions

SEBI clarified that:

• The terms ‘acquirer’ and ‘acquisition’ under the SAST Regulations are to be interpreted broadly.
• They include not just completed acquisitions but also agreements to acquire, i.e. prospective acquisitions.

This interpretation aligns with the regulatory intent to capture acquisition intent and control, even before formal completion.

3. Applicability Under Regulation 3(2)

Specifically, under Regulation 3(2) of the SAST Regulations (pertaining to the requirement of making an open offer upon breach of certain shareholding thresholds):

• The acquisition may be considered to have occurred in the financial year in which the purchase order was placed for executing trades intended to acquire the shares.
• Thus, contractual commitment, even without immediate delivery, triggers the relevant regulatory threshold.

4. Implications for Acquirers and Target Companies

• Acquirers must account for obligations under SAST Regulations as soon as they enter into binding arrangements or place purchase orders.
• Regulatory filings, disclosures, and open offer triggers must be aligned with the year of contractual acquisition, not merely share delivery.
• This ensures early transparency and compliance, consistent with the overarching goal of investor protection and fair takeover practices.

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