Definition
Open Offer (Takeover)
An open offer is a mandatory offer to buy shares from public shareholders when an acquirer crosses certain ownership thresholds in a listed company.
Under SEBI's Takeover Regulations (SAST), an acquirer who buys 25% or more of a listed company, or who gains control, must make an open offer to public shareholders to acquire a further minimum stake (typically 26%), giving them an exit at a regulated price. Crossing the 5% creeping-acquisition limit in a year also triggers obligations.
The open offer protects minority shareholders by letting them sell out when control changes hands, at a price benchmarked to recent market and negotiated prices. It is a cornerstone of India's takeover and governance framework.
Related terms
- Minimum Public ShareholdingMinimum public shareholding (MPS) is the SEBI rule requiring listed companies to keep at least 25% of shares with the public.
- Material DisclosureMaterial disclosure is a listed company's obligation to promptly inform the stock exchanges of events that could affect its share price.
- Corporate GovernanceCorporate governance is the system of rules, practices and controls by which a company is directed, overseen and held accountable to its stakeholders.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.