Can there be a scenario where an acquirer acquires less than a 25% stake in a listed company, and still the provisions of the Takeover Code are triggered?
Backdrop: The SEBI Takeover Code provides that any acquisition of 25% or more stake in a listed company triggers open offer requirements, requiring the acquirer to provide an exit option to at least 26% of the public shareholders.
Conundrum: If an acquirer intends to acquire, say, a 19% stake from a public shareholder of a listed company, would an open offer be triggered?
Dissection: Yes, there could be a situation where the acquirer gains control over the listed company through board representation or management control, even though the acquisition is less than 25% in the listed company. In such scenarios, an open offer would be triggered, irrespective of the intended stake to be acquired, under the SEBI Takeover Code.