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      Question

      Under Regulation 3(2) of the SEBI (SAST) Regulations,

      2011, an acquirer who already holds 25% or more of the voting rights in a target company (but less than the maximum permissible non-public shareholding) is permitted to acquire additional voting rights without triggering a mandatory open offer, provided such acquisition does not exceed what limit?
      A 2% of voting rights in a financial year. Correct Answer Incorrect Answer
      B 3% of voting rights in a financial year. Correct Answer Incorrect Answer
      C 5% of voting rights in a financial year. Correct Answer Incorrect Answer
      D 10% of voting rights in a financial year. Correct Answer Incorrect Answer
      E 25% of voting rights in a financial year. Correct Answer Incorrect Answer

      Solution

      Correct Answer: 3 If an acquirer already holds between 25% and 75% (the typical maximum non-public shareholding), they are allowed a "creeping" window. They can acquire up to 5% additional voting rights in any single financial year (April to March) without making an open offer. The "Gross" Rule: SEBI calculates this 5% on a gross basis . This means you cannot buy 5%, sell 2%, and then buy another 2% in the same year. The moment your total purchases hit 5%, the limit is exhausted, regardless of any intermittent sales.

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