Withdrawal of Open Offer: Impact 
on Merger and Acquisition 
Transactions in India

Securities and Exchange Board of India (SEBI) and the Supreme Court of India have taken a tough stand to allow for a withdrawal of open offers under the Takeover Code, 2011. Analyzing the regulations, it is clear that withdrawal, which did not exist in the earlier takeover regulations, is now allowed under conditions that render the withdrawal of an open offer impossible to complete. SEBI is vested with wide discretionary power under Regulation 27(1)(d), which reads as “such circumstances” of the Takeover Code, 1997, and so carried forward as Regulation 23(d) in the Takeover Code, 2011. The authors analyze the interpretation of “such circumstances” through the various judgments, highlighting the authorities’ understanding of such withdrawal. The self-placed restriction on such discretionary power is analyzed for its impact on merger and acquisition transactions. The importance of circumstances like market situation, the financial situation of the acquirer, material adverse changes, and nonreceipt of lender approval, whether it deserves a place in the regulation, and if yes, the mechanism to misuse of such provision and the protection of investor becomes the center of the article. The prima facie shift from not allowing withdrawal to debating for more clauses for withdrawal to be allowed, the article provides suggestions as felt necessary.