Offer period
Under the SAST Regulations, the period from the agreement or public announcement that triggers an open offer until consideration is paid to accepting shareholders, or the offer is withdrawn.
In plain language
Once an open offer has been triggered, the target company is in play. Prices move, rival bidders appear, insiders are tempted. The takeover code draws a box around this sensitive stretch of time and imposes special rules inside it. That box is the offer period.
It starts at the event that created the obligation — the agreement to acquire, or the public announcement — and ends only when the shareholders who accepted have actually been paid, or the offer is withdrawn. Tendering is just one phase inside it.
How it works
Definition (Chapter 7). The period between the date of entering into an agreement, formal or informal, to acquire shares, voting rights in, or control over a target company requiring a public announcement, or the date of the public announcement, as the case may be, and the date on which payment of consideration to shareholders who accepted the open offer is made, or the date on which the open offer is withdrawn.
What happens inside it (working days unless stated).
| Step | Deadline |
|---|---|
| Escrow account created | at least 2 working days before the detailed public statement |
| Detailed public statement | not later than 5 working days after the public announcement |
| Draft letter of offer filed with SEBI | within 5 working days of the detailed public statement |
| Competing offers | only within 15 working days of the detailed public statement |
| SEBI comments | not later than 15 working days of receiving the draft |
| Letter of offer dispatched | within 7 working days of SEBI comments |
| Last upward revision of price | up to 1 working day before tendering starts |
| Tendering period | starts within 12 working days of SEBI comments; open 10 working days |
| Payment of consideration | within 10 working days of the last tendering day — offer period ends |
| Post-offer advertisement | within 5 working days after the offer period |
Rules that apply because the offer period is running.
- The manager to the open offer may not deal on its own account in the target's shares.
- The acquirer may not complete the underlying acquisition until the offer period expires — unless it deposits 100% of the consideration in cash in escrow, in which case it may act on the agreement after 21 working days from the detailed public statement.
- Every acquisition by the acquirer or a PAC is disclosed within 24 hours; any acquisition above the offer price raises the offer price; and no acquisition is allowed from the third working day before tendering until tendering ends.
- After the 15-working-day competing-offer window, nobody may announce an open offer or trigger one until the offer period expires.
- A bank guarantee in escrow must stay valid throughout the offer period and 30 days after payment is completed.
- In a conditional or voluntary offer, the acquirer may not acquire shares during the offer period except under the offer (and, for a conditional offer, the underlying agreement).
After it ends. The acquisition under the agreement must be completed within 26 weeks of expiry of the offer period; an acquirer pushed above the maximum permissible non-public shareholding cannot make a voluntary delisting offer for 12 months from completion of the offer period.
A worked example
Illustrative figures, and the longest path through the working-day limits. An acquirer signs a share purchase agreement for Rs 210 crore and makes the public announcement on the same day.
Day 0 Agreement + public announcement → offer period begins
+ 5 Detailed public statement (escrow created at least 2 working days before)
+ 5 Draft letter of offer filed with SEBI
+ 15 SEBI comments
+ 12 Tendering period opens
+ 10 Tendering period closes
+ 10 Payment to accepting shareholders → offer period ends
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57 working days — roughly eleven to twelve calendar weeks
Three things the acquirer wants to do, and the answer each time.
| Wish | Allowed? |
|---|---|
| Close the Rs 210 crore share purchase in week 3 to get board seats early | Only if 100% of the open-offer consideration is deposited in cash in escrow, and only after 21 working days from the detailed public statement |
| Buy 50,000 shares on the exchange at Rs 176 when the offer price is Rs 170 | It may, if before the third working day prior to tendering — but the offer price then rises to Rs 176 for everyone, and the purchase must be disclosed within 24 hours |
| Buy on the second day of tendering | No — barred from 3 working days before tendering until it closes |
And once the offer period closes, the clock that matters is 26 weeks: the Rs 210 crore acquisition must be completed by then, unless SEBI extends it for extraordinary and supervening circumstances.
Why NISM asks about it
Chapter 7 (Other Merchant Banking Activities – Mergers, Acquisitions & Takeovers), 15% of the paper, defines the offer period and sets almost every timeline that runs inside it.
It is a natural home for sequencing (ORDER) questions and for "which of these is prohibited during the offer period" questions — the manager dealing on its own account, completion of the acquisition, and purchases in the three working days before tendering.
Common exam traps
- The offer period ends on payment, not on the close of tendering.
- It can start before any announcement — on the date of an agreement, formal or informal, that requires one.
- Withdrawal also ends it.
- 21 working days is the early-completion exception, and it needs 100% cash escrow; the default is no completion until the offer period expires.
- 26 weeks (complete the acquisition after the offer period) is not the same as the 26-week look-back for the highest price paid.
- Offer-period timelines are in working days; the post-issue report deadlines in public issues are stated in days.
- Price rises ratchet. A purchase above the offer price during the offer period revises the offer price to that highest price.
Check yourself
1.During the offer period, a person acting in concert with the acquirer buys target shares at ₹540, above the ₹500 offer price. What are the consequences?
- a)The offer price must be revised to ₹540, and no such acquisition may be made after the third working day before the tendering period starts until the tendering period expires
- b)None, since the buyer is not the acquirer itself
- c)The acquirer must pay the difference only to shareholders who tendered after the purchase
- d)The offer is automatically withdrawn
Show the answer
Answer: (a) The offer price must be revised to ₹540, and no such acquisition may be made after the third working day before the tendering period starts until the tendering period expires
The offer price rises to the highest price paid. Where the acquirer has acquired or agreed to acquire whether by himself or through or with persons acting in concert with him any shares or voting rights in the target company during the offer period, whether by subscription or purchase, at a price higher than the offer price, the offer price shall be revised to the highest price paid or payable for any such acquisition. Further, no such acquisition shall be made after the third working day prior to the commencement of the tendering period and until the expiry of the tendering period.
- Not the acquirer itself — purchases by persons acting in concert count.
- Only later tenderers — the revision applies to the offer price for everyone.
- Withdrawal — not a permitted withdrawal ground.
2.What is the minimum size of a mandatory open offer, and of a voluntary open offer?
- a)Both must be for at least 26% of total shares
- b)A mandatory offer must be for at least 26% of total shares as on the tenth working day from closure of the tendering period; a voluntary offer for at least such number as would give an additional 10% of the voting rights
- c)A mandatory offer for 25% and a voluntary offer for 20%
- d)There is no minimum in either case
Show the answer
Answer: (b) A mandatory offer must be for at least 26% of total shares as on the tenth working day from closure of the tendering period; a voluntary offer for at least such number as would give an additional 10% of the voting rights
The open offer for acquiring shares to be made by the acquirer and persons acting in concert with him shall be for at least 26% of total shares of the target company, as on 10th working day from the closure of the tendering period.
The open offer shall be for acquisition of at least such number of shares as would entitle the holder thereof to exercise an additional 10% of the voting rights in the target company, and shall not exceed such number of shares as would result in the post-acquisition holding of the acquirer and persons acting in concert with him exceeding the maximum permissible non-public shareholding.
The 26% count is forward-looking: it shall take into account all potential increases in the number of outstanding shares during the offer period contemplated as of the date of the public announcement, and the offer size shall be proportionately increased in case of an increase in total number of shares, after the public announcement which is not contemplated on the date of the public announcement.
Option C confuses the 25% trigger with the offer size.
A voluntary offer has its own eligibility conditions. It is open to an acquirer holding 25% or more but less than the maximum permissible non-public shareholding, but where the acquirer or any person acting in concert with him has acquired shares of the target company in the preceding 52 weeks without attracting the obligation to make a public announcement of an open offer, he shall not be eligible.
And it carries a cooling-off: no further acquisitions for a period of six months after completion of the open offer except pursuant to another voluntary open offer — with shares acquired through bonus issue or stock splits excluded from the count.
On a competing offer, a voluntary offeror may enlarge: it shall be entitled to increase the number of shares... to such number of shares as he deems fit, within a period of 15 working days from the public announcement of a competing offer.
And breaching the public shareholding limit has consequences — sell down under the SCRR, and no voluntary delisting unless a period of 12 months has elapsed from the date of the completion of the offer period.
3.Within what period may a competing offer be announced, and what must its size be?
- a)Within 15 working days of the first acquirer's detailed public statement, for at least the first acquirer's holding including the shares it proposes to acquire
- b)Within 15 calendar days of the first public announcement, for at least 26% of total shares
- c)At any time before the tendering period closes, for any size
- d)Within 5 working days of the first detailed public statement, for the same size as the first offer
Show the answer
Answer: (a) Within 15 working days of the first acquirer's detailed public statement, for at least the first acquirer's holding including the shares it proposes to acquire
When a public announcement of an open offer for acquiring shares of a target company is made, any person, other than the acquirer who has made such public announcement, is entitled to make a public announcement of an open offer within 15 working days of the date of the detailed public statement made by the acquirer who has made the first public announcement.
Working days, and from the detailed public statement — not the public announcement.
The size: the open offer made shall be for such number of shares which, when taken together with shares held by the acquirer along with persons acting in concert with him, shall be at least equal to the holding of the acquirer who has made the first public announcement, including the number of shares proposed to be acquired by him under the offer and any underlying agreement for the sale of shares of the target company.
So the competing bid must be able to match the first bidder's eventual position — a genuine contest, not a token gesture.
Option C ignores the closing of the window: nobody is entitled to make a public announcement of an open offer for acquiring shares, or enter into any transaction that would attract the obligation to make a public announcement of an open offer... after the period of fifteen working days and until the expiry of the offer period.
And two kinds of offer admit no competition at all — where the open offer is for acquisition of shares pursuant to disinvestment or pursuant to a relaxation from strict compliance as granted by SEBI.
Once there are competing offers they run together: the schedule of activities and the tendering period for all competing offers shall be carried out with identical timelines. The last date for tendering shares in acceptance of every competing offer shall stand revised to the last date for tendering shares in acceptance of the competing offer last made.
Revisions must improve terms: an earlier competing acquirer may revise provided the revised terms are more favourable to the shareholders of the target company, and all may raise the price at any time up to 1 working day prior to the commencement of the tendering period.
And conditionality follows the first offer: unless the open offer first made is an open offer conditional as to the minimum level of acceptances, no acquirer making a competing offer may be made conditional as to the minimum level of acceptances.
A competing offer is not a voluntary offer — and a wilful defaulter, otherwise barred, may make one.
Where this is taught
Free preparation for NISM Series IXRelated terms
- Competing offerAn open offer made by another person within 15 working days of the first acquirer's detailed public statement, for at least as many shares as the first acquirer would end up holding.
- Conditional offerAn open offer made subject to a minimum level of acceptance — if that level is not reached, the acquirer buys nothing under the offer and the underlying agreement is rescinded.
- Escrow accountThe security an acquirer must deposit before a takeover open offer — 25% of the first Rs 500 crore of consideration plus 10% of the balance — so that the money to pay tendering shareholders is ring-fenced.
- Manager to the open offerThe SEBI-registered merchant banker, not an associate of the acquirer, appointed before the public announcement to run an open offer and answer to SEBI for its funding, disclosures and escrow.
- Persons acting in concertPersons who, with a common objective of acquiring shares, voting rights or control of a target company, co-operate under a formal or informal agreement — plus categories the SAST Regulations deem to act in concert.
- TakeoverThe acquisition of substantial shares or voting rights in a company for the purpose of seeking management control — regulated for listed companies by the SEBI (SAST) Regulations, 2011.
- Voluntary offerAn open offer that an acquirer already holding 25% or more (but below the maximum permissible non-public shareholding) chooses to make to consolidate its stake, without any trigger forcing it.
- Special escrow accountThe account an acquirer opens with a SEBI-registered banker to an issue to hold the cash consideration payable to shareholders who tendered in an open offer, operated by the manager to the open offer.
- DisinvestmentThe direct or indirect sale by the Central Government, a State Government or a government company of shares, voting rights or control in a public sector undertaking.
- AcquirerUnder the SEBI takeover code, any person who acquires — or agrees to acquire — shares, voting rights or control over a target company, alone, through another, or with persons acting in concert.