India’s capital markets regulator is implementing sweeping reforms to its merger and acquisition framework designed to enhance protection for retail investors and streamline corporate transactions. The Securities and Exchange Board of India (SEBI) is proposing significant amendments to its takeover code that would fundamentally reshape how acquisitions are conducted in the country’s rapidly growing market.
The comprehensive regulatory overhaul includes prohibiting acquirers from negotiating preferential deals with large shareholders for a six-month period following public open offers. This measure directly addresses historical instances where major investors received exclusive benefits not available to smaller shareholders. Additionally, SEBI plans to substantially reduce the completion timeline for open offers from the current two months to just 30 days, implementing accelerated regulatory clearance mechanisms to facilitate faster deal execution.
A key innovation in the proposed framework involves introducing mandatory external valuation requirements for private share sales between large shareholders and selected parties. This ensures transparent and fair pricing mechanisms that protect all investors’ interests. The reforms emerge against a backdrop of intensified M&A activity throughout 2025, driven by the Reserve Bank of India’s policy allowing domestic banks to finance acquisitions and increasing foreign investment in Indian enterprises.
SEBI Chairman Tuhin Kanta Pandey confirmed the regulatory initiative following a board meeting, indicating that detailed proposals would soon be released for public consultation. The revisions also encompass potential modifications to ‘creeping acquisition’ norms, which currently permit existing investors to increase their stakes by up to 5% annually without triggering mandatory open offers. This review aligns with global standards, as Singapore maintains a 1% threshold every six months while Hong Kong allows 2% annual increases.
The regulatory gap became particularly evident in December 2022 when Adani Group acquired a 27.26% stake in New Delhi TV Ltd, providing founders a 17% premium over the open-offer price offered to minority shareholders just 18 days after the public offer. Although Adani subsequently revised terms for minority investors, the incident highlighted structural vulnerabilities in the existing framework that these reforms aim to address.