M is contemplating acquisition of PQR Limited, a listed entity. He presently holds 23% and his sister, who is having common objective, holds 3%. Their combined holding is 26%. M, in view of creeping acquisition limits, d

Analysis based on SEBI (SAST) Regulations, 2011: 1. Initial Holding and Trigger for Open Offer (Regulation 3(1)): As per Regulation 3(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, no acquirer shall acquire shares or voting rights in a target company which, taken together with shares or voting rights, if any, held by him and by persons acting in concert with him, entitles them to exercise 25% or more of the voting rights in such target company, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company in accordance with these regulations. In the given case, M holds 23% and his sister (acting in concert with him) holds 3%. Their combined holding is 26%. Since their combined holding already exceeds 25%, M would have been required to make an open offer at the point their holding reached 25% or more. 2. Creeping Acquisition (Regulation 3(2)): Regulation 3(2) states that no acquirer, who together with persons acting in concert with him, has acquired and holds shares or voting rights in a target company entitling them to exercise 25% or more of the voting rights but less than the maximum permissible non-public shareholding, shall acquire within any financial year additional shares or voting rights in such target company entitling them to exercise more than 5% of the voting rights, unless the acquirer makes a public announcement of an open offer for acquiring shares of such target company. M and his sister already hold 26%. If M desires to acquire a further 3%, their total holding would become 29%. This additional 3% acquisition falls within the creeping acquisition limit of 5% in a financial year for those already holding 25% or more but less than the maximum permissible non-public shareholding. 3. Individual Shareholding Exceeding Threshold (Regulation 3(3)): Regulation 3(3) specifies that acquisition of shares by any person, such that the individual shareholding of such person acquiring shares exceeds the stipulated threshold, shall also attract the obligation to make an open offer for acquiring shares of the target company, irrespective of whether there is a change in the aggregate shareholding with persons acting in concert. M's individual holding is 23%. If he acquires an additional 3%, his individual holding will become 26%. This crosses the 25% threshold for individual holding, which triggers an open offer requirement. Conclusion: In view of the above-mentioned provisions, although M and his sister's combined holding of 26% allows for a creeping acquisition of up to 5% in a financial year without an open offer (as long as the individual holding doesn't cross 25%), M's individual acquisition of 3% will take his personal holding from 23% to 26%. This individual crossing of the 25% threshold mandates an open offer under Regulation 3(3). Therefore, M will be required to make an open offer .