What is the Process of Takeover a Company in India?

Last Updated on February 19, 2026

Nowadays, due to strategic reasons, companies of all industries, from startup organisations to family-owned businesses to private equity firms to fast-growing enterprises, are taking advantage of using acquisitions as a tool to grow into new markets, build capabilities and consolidate operations.

Like any transaction, a corporate acquisition in India is a complex process governed by legislation and guidelines from multiple regulatory authorities. Failure to properly follow the rules during the course of an acquisition, otherwise known as a “takeover”, may result in the deal being delayed or cancelled

This article explains the process of a corporate takeover and what an acquirer should do to prepare for the legal process before being in a position to complete it.

What is a Company Takeover in India?

In India, “takeover” means the acquisition of a significant equity interest, including control, in a company. Takeovers depend on the target being a listed company or an unlisted company. Specifically, for a listed company, the Substantial Acquisition of Shares and Takeover Regulations, 2011, commonly referred to as the SEBI Takeover Code, govern the procedure of the listed company to provide transparency, ensure that all shareholders are treated equally and protect the interests of minority shareholders.

The primary law governing unlisted companies when a company is acquired is the Companies Act, 2013, along with contractual agreements and sector-specific regulations. The law is concerned with the method of control or voting power that has been acquired as a result of the acquisition.

The Company Takeover Process – Step-by-Step Guide

Step 1: Structuring the Transaction Strategically

All acquisitions begin with a structural approach to the acquisition. The acquisition of control will determine the regulatory process that the business will follow. Common structures of the acquisition are:

• Acquisition of shares from existing shareholders
• Acquisition of a controlling interest without owning the majority of shares
• Acquisition of control through the acquisition of the holding or parent company

Each of the above structures carries differing requirements for disclosure, approval and timing. Choosing the wrong structure at the beginning of an acquisition can result in the unintended consequences of regulatory action later on.

Step 2: Regulatory Thresholds That Trigger Compliance

Takeover Regulations are based on thresholds, particularly in the case of companies listed in India.

• Crossing a 25% Voting Rights Threshold: When a party acquires more than 25% of the total votes of a company, it must give public shareholders an open offer. This requirement to provide a fair exit for minority shareholders is in the interests of all shareholders.
• Creeping Acquisition Limits: Parties who have acquired between 25% and 75% of a company’s total voting rights in any 12-month period will be required to make an open offer every time they acquire more than 5% of a company’s total voting rights.
• Acquisition of Control: Parties may trigger the obligation to make an open offer by acquiring management control of a company, dominance on the board of directors, or significant influence over the company’s strategic decisions, even when they do not exceed the numerical threshold. Understanding all of these thresholds before the transaction occurs is crucial; otherwise, there is a risk of facing enforcement action by SEBI.

Step 3: The Mandatory Open Offer Process

The open offer is a key part of the takeover process for listed companies and is professionally regulated.

• Mandatory Appointment of a SEBI-Registered Merchant Banker: The acquirer is required to appoint a Category I merchant banker to manage and oversee the entire Open Offer of Takeover Bid process, including the necessary disclosures and filings.
• Mandatory Public Announcement: A public announcement must be made within prescribed timelines detailing the following-

1. Identity of the Acquirer
2. Details of the Target Company

• Size of the Offer and Pricing, including other conditions

1. Source of Funds for the Offer
2. Intentions of the Acquirer Post Acquisition.

The public announcement is intended to provide transparency to the market in order to protect investors’ confidence in the market.

• Mandatory Determination of Offer Price: In accordance with the SEBI Pricing Formula, the offer price must be set with fairness in order to avoid preferential treatment to any class or category of shareholders.
• Mandatory Offer Period and Settlement: During the Offer Period, Shareholders are entitled to tender their Shares. Upon completion of the Offer Period, all accepted Shares must be transferred to the Acquirer and consideration paid for Shares in accordance with regulated timelines. Any failure by the acquirer to comply with Pricing, Disclosures or Timelines will likely terminate the transaction.

Step 4: Filing Statutory Documents and Getting Government Approvals   

In a corporate takeover, there are different approvals/filings that need to be submitted to various regulatory authorities. This includes:

1. The Public Company Administration – SEBI for compliance with regulations on takeovers.
2. Stock Exchanges for compliance with Stock Exchange disclosure requirements and trading regulations.
3. Ministry of Corporate Affairs (MCA) to file returns under the Companies Act.
4. Competition Commission of India (CCI) if the acquisition has an effect on competition in the market.
5. Insolvency-related transactions or schemes require the approval of the National Company Law Tribunal (NCLT).

Every regulatory authority will have its own processing times, and communication with each of these authorities for ensuring the certainty of the deal is critical for completing a transaction.

Step 5: Takeovers via the Insolvency Process   

A different method to buy troubled companies under the Insolvency and Bankruptcy Code, 2016 (IBC) is to do so through the process set out in the IBC. Under IBC:

• Every distressed company will have to go through a Corporate Insolvency Resolution Process (CIRP).
• Interested persons will submit their proposed resolution plans.
• Any resolution plan approved by the committee of creditors will allow the winning bidder to take title to and use the company’s assets as if they owned them.

This process has become an alternative means of purchasing high-value companies and their associated assets, while also allowing pricing to be favourable to the purchaser.  However, as noted previously, implementing a successful acquisition strategy via the IBC relies heavily on effective legal and financial structuring.

Post Integration Compliance

The share transfer is only one part of acquiring a company. Following the acquisition, there are obligations that have to be fulfilled, including:

• Reconstitution of the Board
• Completion of any statutory filings or disclosures
• Reporting on changes in management or ownership
• Continued compliance with SEBI and MCA regulations

If post-closing compliance requirements are not met properly, it can negate whatever benefit an acquirer may have received from buying an acquired company.

How Kanakkupillai Assists with a Compliant Takeover?

Kanakkupillai provides the necessary support to complete a compliant acquisition by helping you with all aspects of the acquisition process, from identifying acquisition trigger events and structuring the acquisition to ensuring that SEBI compliance, making Open Offer, Statutory filings, etc., all comply with all legal requirements necessary for your acquisition to be deemed legal at all stages of the acquisition.

Kanakkupillai manages due diligence on the proposed company, prepares the acquisition documentation, and oversees post-acquisition compliance with SEBI, allowing you to focus on the acquisition outcomes rather than regulatory risks.

Conclusion

Acquiring companies in India can be extremely effective as a market expansion strategy; however, being part of India’s cache of companies being formally incorporated means that acquisitions could be hampered by multiple factors, from understanding what triggers an acquisition to meeting the various regulations that govern post-acquisition compliance.

Frequently Asked Questions (FAQs)

1. How to take over a company in India?

By acquiring a controlling stake in shares or assets through purchase, merger, or acquisition as per Indian laws.

2. What is the process of takeover?

It involves due diligence, valuation, regulatory approvals, shareholder consent, and transfer of control.

3. How does a company get taken over?

When another entity gains majority ownership or management control through shares or assets.

4. How to transfer company ownership in India?

By legally transferring shares or business assets under the Companies Act, 2013 and, if listed, SEBI regulations.