Basic Concepts of Takeover

What is meant by Takeovers & Substantial acquisition of shares?

When an “acquirer” takes over the control of the “target company”, it
is termed as takeover. When an acquirer acquires “substantial quantity
of shares or voting rights” of the Target Company, it results into
substantial acquisition of shares. The term “Substantial” which is used
in this context has been clarified subsequently.

What is a Target Company?

A Target Company is a company whose shares are listed on any stock
exchange and whose shares or voting rights are acquired/being
acquired or whose control is taken over/being taken over by an

Who is an Acquirer?

An acquirer means any individual/company/any other legal entity
which intends to acquire or acquires substantial quantity of shares or
voting rights of target company or acquires or agrees to acquire
control over the target company. It includes persons acting in concert
(PAC) with the acquirer.

What is meant by the term “Persons Acting in Concert (PACs)”?

PACs are individual(s)/company(ies)/ any other legal entity(ies) who
are acting together for a common objective or for a purpose of
substantial acquisition of shares or voting rights or gaining control over
the target company pursuant to an agreement or understanding
whether formal or informal. Acting in concert would imply co-operation,
co-ordination for acquisition of voting rights or control, either direct or
The concept of PAC assumes significance in the context of substantial
acquisition of shares since it is possible for an acquirer to acquire shares
or voting rights in a company “in concert” with any other person in such
a manner that the acquisition made by them may remain individually
below the threshold limit but collectively may exceed the threshold limit.
Unless the contrary is established certain entities are deemed to be
persons acting in concert like companies with its holding company or
subsidiary company, mutual funds with its sponsor / trustee / asset
management company, etc.