An acquirer, along with persons acting in concert (PAC) may come up with an Open Offer for acquisition of shares of a listed entity either voluntarily or compulsorily. Differentiate between the two processes.

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 provides certain trigger events wherein the Acquirer is required to give Open Offer to the shareholders of the Target Company to provide them exit opportunity. However, it also allows the Acquirer to make voluntary offer as well. Voluntary Offer means the Open Offer given by the acquirer voluntarily without triggering the mandatory Open Offer obligations as envisaged under these regulations. The distinction between the voluntary and compulsory open offer are as under: Eligibility: In compulsory open offer, the eligibility can be triggered through both direct and indirect acquisition. Whereas, in voluntary offer, the eligibility can be triggered by acquirer holding more than 25% or more. Further in this case, the acquirer or person acting in concert should not have acquired shares of target company without the obligation to make compulsory offer during the preceding 52 weeks. Applicability: In case of compulsory open offer, applicability is on crossing the threshold or the creeping acquisition or by way of control. Whereas, in Voluntary open offer, no such applicability is required. Minimum Size of Open Offer: In compulsory open offer, the acquirer must give an open offer to the shareholders for acquisition of at least 26% of the total shares of the Target Company. Whereas in voluntary open offer the minimum size shall be 10% of the voting rights in the target company.