Creeping acquisition limit
The 5% a financial year an acquirer already holding 25% or more can add before an open offer becomes mandatory.
Open offer on crossing 5% in a financial year
Counted from an acquisition that would take the financial year's acquisitions past 5% of the shares or voting rights
- SEBI
- Insider trading and takeovers
- Not specified
- 2026-09-01
The limit is measured across a financial year, not against a due date. SAST Reg 3(2) says an acquirer who, with persons acting in concert, already holds 25% or more but less than the maximum permissible non-public shareholding cannot acquire more than 5% of the shares or voting rights in a financial year without making an open offer. The 10% relaxation people still cite applied to financial year 2020-21 only and is spent.
The 10% creeping acquisition relaxation is still widely quoted. It applied to financial year 2020-21 only under the first proviso to Reg 3(2) and is spent. The current limit is 5% in a financial year.
Deadlines counted from an event
An acquirer holding 25% or more, but less than the maximum permissible non-public shareholding, may acquire up to 5% of the shares or voting rights in a financial year without an open offer. The acquisition that would cross that 5% requires a public announcement of an open offer first. The measurement window is the financial year; the announcement is made on the date of the triggering agreement or acquisition, so there is no period to count.
The rule
An acquirer holding 25% or more, but less than the maximum permissible non-public shareholding, may acquire up to 5% of the shares or voting rights in a financial year without an open offer. The acquisition that would cross that 5% requires a public announcement of an open offer first. The measurement window is the financial year; the announcement is made on the date of the triggering agreement or acquisition, so there is no period to count.
Who must comply
- An acquirer holding 25% or more but less than the maximum permissible non-public shareholding of a target company, with persons acting in concert
- Reg 10 exempts specified acquisitions from the open offer obligation, subject to its own reporting requirements
Statutory basis
Before you file
- Add up every acquisition made in the current financial year.
- Include the acquisitions of every person acting in concert.
- Confirm the current holding against the maximum permissible non-public shareholding.
- Check whether the proposed acquisition is exempt under Reg 10.
How to file
- Measure the financial year's acquisitions against the 5% limit before each new acquisition.
- Stop below the limit, or make the public announcement of an open offer first.
- Make the Reg 29(2) disclosure for the acquisition itself, which is a separate duty.
If you miss it
Crossing the limit without an open offer is the same failure as a Reg 3(1) breach, so section 15H of the SEBI Act applies at ₹25 crore or three times the profit made, whichever is higher. SEBI also directs a delayed open offer with interest, and can order divestment of the excess shares.
- The 5% is measured gross across the financial year in the usual reading, so intra-year sales do not automatically restore headroom, and this is where acquirers most often miscount
- The acquisition still needs its Reg 29(2) disclosure, so a creeping-limit breach is normally visible from the disclosures themselves
Common questions
Is the creeping acquisition limit 5% or 10%?
5%. The 10% figure came from the first proviso to Reg 3(2) and applied to financial year 2020-21 only. It is spent and should not be relied on.
Does the limit reset each year?
The measurement window is the financial year, so a new year opens fresh headroom. Within a year, the acquirer has to count its own acquisitions and those of persons acting in concert together.