Disclosure Requirements (Regulation 29)

Regulation 29 is the transparency backbone of the takeover regime. Long before an acquirer ever reaches the 25% open-offer line, the market is entitled to know who is quietly building a position. The provision converts ownership of a listed company into a public, real-time data feed: cross 5% and you must declare yourself; thereafter move by more than 2% in either direction and you must declare again — each time within two working days, to both the target company and every stock exchange where its shares are listed. The obligation is deliberately mechanical and unforgiving. As the Securities Appellate Tribunal has repeatedly held, it is a strict-liability duty: it bites the moment the threshold is crossed, regardless of intent, mode of acquisition, or whether any investor was actually harmed. This chapter unpacks the text, the thresholds, the timeline, and the rich body of adjudication and SAT precedent that gives Regulation 29 its teeth.

Where Regulation 29 sits in the disclosure architecture

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 contain two distinct disclosure regimes in Chapter V. Regulation 29 governs event-based disclosures — they are triggered by a transaction that crosses a numerical line. Regulation 30, by contrast, governs continual annual disclosures by persons holding 25% or more and by promoters, made every year as on 31 March. Regulation 31 deals with encumbrance (pledge) disclosures. Regulation 29 is the entry-level gatekeeper of the whole scheme: it begins to operate at 5%, far below the 25% substantial-acquisition threshold that triggers a mandatory open offer. The legislative logic is that the market should be able to watch a stake being assembled in stages, rather than being surprised when an acquirer suddenly surfaces above the open-offer line. Disclosure is thus the early-warning system that complements the substantive trigger for an open offer. For the architecture as a whole, see the SEBI Takeover Code hub.

Regulation 29(1): the 5% initial disclosure

Regulation 29(1) provides that any acquirer who, together with persons acting in concert (PAC) with him, acquires shares or voting rights in a target company which, taken together with shares or voting rights already held, aggregates to five per cent or more of the shares of the target company, shall disclose their aggregate shareholding and voting rights. The disclosure is one-time at this stage: it is the announcement that the acquirer has entered the regulatory radar. Crucially, the threshold is measured against the acquirer's aggregate position together with PACs, not transaction by transaction — a point that flows from the concert-party concept explained in the chapter on definitions. A proviso added for companies listed on the Innovators Growth Platform raises this entry threshold to ten per cent, reflecting the different ownership profile of such issuers. The reference to both "shares" and "voting rights" is deliberate: convertible securities and instruments carrying voting entitlement are captured so that an acquirer cannot evade disclosure by holding economic interest in a non-equity wrapper.

The one-time character of the 29(1) filing is often misunderstood. The sub-regulation is engaged only on the occasion the holder first crosses 5%; a holder who has always been below that line and crosses it must file, but a holder who is already above 5% and acquires more does not refile under 29(1) — that holder's continuing obligations live in 29(2). The aggregate test also means that an acquirer cannot escape by acquiring 4.9% personally while a concert party acquires the balance; the holdings of the acquirer and all PACs are added together, and it is the combined figure that is measured against the 5% line. This is a direct consequence of treating persons acting in concert as a single deemed acquirer for the purposes of the Code, and it is why careful identification of the concert party — covered in the chapter on definitions — is the first step in any disclosure analysis.

Regulation 29(2): the 2% change disclosure

Once an acquirer holds 5% or more, Regulation 29(2) imposes an ongoing duty. Any further acquisition or disposal of shares or voting rights by the acquirer together with PACs, which results in the shareholding falling below 5% or which represents a change of more than two per cent of the total shareholding or voting rights of the target company since the last disclosure, must again be disclosed. The 2% figure is calculated against total shareholding or voting rights of the target, not against the acquirer's own holding — so a holder at 6% who moves to 8.01% must disclose, but movement of exactly 2% does not by itself trigger the duty (the change must exceed 2%). The sub-regulation is symmetric: it captures both acquisitions and disposals, so a large seller is as visible to the market as a large buyer. For Innovators Growth Platform companies the corresponding figures are higher. Reg 29(2) is the workhorse of the regime and the source of the bulk of SEBI's adjudication orders, because it requires holders to continuously monitor their position and react to every qualifying swing.

A subtle but heavily litigated feature is the meaning of "since the last disclosure." The 2% change is not measured against the original 5% entry point but against the holding stated in the most recent disclosure the holder actually made. If a holder discloses at 6% and then drifts to 7.9% over several small transactions, no single transaction triggers a filing, but the cumulative move of more than 2% does — and the failure to track that cumulative drift is one of the commonest causes of penalty. Equally, the words "falling below 5%" mean that an exit is as disclosable as an entry: a holder who sells out of the 5% band must announce that departure, ensuring the market knows when a substantial holder has ceased to be substantial. Because the duty is recalibrated at each disclosure, a diligent holder must maintain a running record of its last-reported position and reset the 2% counter every time a fresh filing is made.

Regulation 29(3): the two-working-day deadline

Regulation 29(3) fixes the timeline and the recipients. The disclosures under sub-regulations (1) and (2) must be made within two working days of the receipt of intimation of allotment of shares, or the acquisition of shares or voting rights, as the case may be. The disclosure goes to two recipients: every stock exchange where the shares of the target company are listed, and the target company at its registered office. The deadline runs from the date of allotment or acquisition — not from the date the acquirer chooses to compute its holdings — and "working days" means trading days of the stock exchange, excluding holidays. The Tribunal has treated this timeline as mandatory rather than directory: in the line of cases discussed below, even a delay of a few days has attracted penalty. The two-recipient rule matters because the acquirer alone bears the filing duty; the target company cannot discharge it on the acquirer's behalf, and filing with only one of the two recipients is an incomplete compliance.

The choice of the allotment date as the starting point for the clock is significant in primary-market situations. Where the trigger is a fresh issue of shares — a preferential allotment or a conversion of warrants — the two days run from the receipt of intimation of allotment, not from the board resolution or the application. Where the trigger is a secondary-market acquisition, the clock runs from the acquisition itself, which in a depository settlement is ordinarily the date the shares are credited. The Tribunal's treatment of the timeline as mandatory means that the holder cannot plead administrative delay, reconciliation of demat statements, or reliance on a registrar as an excuse: the responsibility to compute the holding and file in time is the holder's own. This strictness is the reason that, in practice, large holders maintain automated alerts keyed to their depository accounts so that a qualifying movement is flagged the same day it settles.

"Shares" and "voting rights": what is counted

Regulation 29 speaks throughout of "shares or voting rights," and the distinction is not academic. Under the SAST scheme, "shares" includes securities that carry voting rights and any security entitling the holder to receive shares with voting rights, but ordinarily excludes preference shares. The result is that warrants, convertible debentures and partly paid shares with voting entitlement are folded into the calculation. This prevents the obvious avoidance device of parking economic exposure in instruments that fall just short of equity. The interaction with the definition of "acquisition" — which is itself extremely wide and includes acquisition irrespective of whether there is a change in control — is set out in the chapter on definitions. The breadth of "acquisition" is why disclosure can be triggered by events that feel passive to the acquirer, such as receiving shares under a scheme of amalgamation, a gift, or an inter-se promoter transfer — a point squarely decided by the Securities Appellate Tribunal.

Strict liability: the Akriti Global principle

The single most important judicial gloss on Regulation 29 is that the disclosure duty is one of strict liability. In Akriti Global Traders Ltd. v. SEBI (Securities Appellate Tribunal, order dated 30 September 2014), the appellant argued that its acquisition arose from a scheme rather than a market purchase and that no investor had suffered. The Tribunal rejected both contentions. It held that the obligation to make disclosures under the SAST Regulations (and the corresponding PIT Regulations) arises the moment shares are acquired above the prescribed limit, and that it is immaterial how the shares were acquired — whether by open-market purchase, preferential allotment, amalgamation, or otherwise. The penal liability is neither dependent on the intention of the parties nor on any gain made from the delay. This converts Regulation 29 into a bright-line rule: the acquirer's good faith, the absence of profit, and the technical character of the breach are all irrelevant to whether a violation occurred, though they may bear on quantum. The principle has been applied consistently in subsequent adjudication orders and remains the standard answer to any "no harm, no foul" defence.

The strict-liability characterisation has an important doctrinal consequence: mens rea is not an ingredient of the contravention. SEBI need not prove that the acquirer intended to conceal its position or even knew of the obligation; the actus of crossing the threshold without timely disclosure is sufficient. This aligns Regulation 29 with the broader line of securities-law authority holding that penalties for regulatory, as distinct from criminal, defaults are civil in nature and do not require proof of a guilty mind. The acquirer's submissions about inadvertence, reliance on advisers, or the modest size of the breach are therefore admissible only at the quantum stage under Section 15J, never as a complete defence. For the exam, the safe formulation is that liability under Regulation 29 is established on proof of the objective fact of late or non-disclosure, full stop.

No harm need be shown: Komal Nahata

A closely related proposition was settled in Komal Nahata v. SEBI (Securities Appellate Tribunal, order dated 27 January 2014). The appellant contended that since no investor had actually suffered from the non-disclosure, and since mitigating factors under Section 15J of the SEBI Act, 1992 had not been adequately weighed, the penalty should be set aside. The Tribunal held that the argument lacked merit: the penalty for non-compliance with the disclosure provisions of the SAST and PIT Regulations is not dependent upon investors actually suffering loss. The purpose of the disclosure regime is to keep the market and the regulator continuously informed about shifts in substantial holdings; the harm the law guards against is informational opacity itself, not a quantified investor loss. Read together, Akriti Global and Komal Nahata dispose of the two defences most commonly raised against disclosure penalties — "I did not intend to breach" and "nobody was hurt."

Counting on a gross basis: each leg is a separate event

A recurring dispute is whether an acquirer may set off an acquisition against a subsequent disposal so that, on a net basis, the holding has not moved by more than 2%. SEBI's settled position, upheld in adjudication, is that Regulation 29(2) tracks changes in holding and that opposite transactions are not to be netted off to defeat the disclosure obligation: each qualifying movement is assessed against the holding disclosed at the last reporting event. A holder who buys past the 2% line and then sells back has nonetheless crossed the threshold, and the buy leg is independently disclosable. The rationale is consistent with the strict-liability approach in Akriti Global: the regulation is concerned with the transparency of the position as it evolves, not merely with the snapshot at period-end. This is why aggregation of an acquirer's transactions with those of its PACs, as explained under definitions, is essential — fragmenting purchases across concert parties to keep each below the line does not avoid the duty.

The penalty: Section 15A(b) of the SEBI Act

A failure to make, or a delay in making, the disclosures required by Regulation 29 is a contravention punishable under Section 15A(b) of the SEBI Act, 1992 — the provision dealing with failure to furnish information, documents or returns. Following the 2017 amendment, Section 15A(b) provides for a penalty extending up to one lakh rupees for each day during which the failure continues, or one crore rupees, whichever is less. Because the failure to disclose is treated as a continuing default until the disclosure is finally made, even a short slip in a single filing can, on the face of the section, scale rapidly. In the Akriti Global line, the Tribunal noted that on a literal day-count basis a violation of Regulations 29(1) and 29(2) could exceed one crore rupees — which is precisely why the cap and the discretion under Section 15J became central to the quantum debate discussed next.

Quantum and discretion: Bhavesh Pabari

The liability question and the quantum question are distinct. Even where a Regulation 29 breach is made out on strict-liability principles, the Adjudicating Officer retains discretion on how much to impose, and that discretion is structured by Section 15J of the SEBI Act. In Adjudicating Officer, SEBI v. Bhavesh Pabari (Supreme Court of India, decided 28 February 2019), the Court resolved the relationship between the penalty sections (15A to 15HA) and Section 15J. It held that the three factors enumerated in Section 15J — the amount of disproportionate gain, the loss caused to investors, and the repetitive nature of the default — are illustrative and not exhaustive; the Adjudicating Officer may consider other relevant mitigating circumstances. The Court also clarified that the explanation inserted by Act 7 of 2017 vested a controlled discretion in the officer, and that "repetitive" in clause (c) refers to a recurring or successive default rather than a single continuing one. The practical upshot for Regulation 29 cases is that the technical, no-gain, first-time character of a disclosure lapse is irrelevant to liability but highly relevant to the penalty actually fixed.

Pledges and encumbrances: the Regulation 31 overlap

Regulation 29 must be read alongside Regulation 31, which governs disclosure of encumbered shares. Under the scheme, the creation of an encumbrance — typically a pledge of shares by a promoter — is treated as an acquisition by the person in whose favour the encumbrance is created, and the release of the encumbrance is treated as a disposal, with disclosures to be made accordingly. SEBI's circular dated 7 August 2019 sharpened this by requiring a promoter, together with PACs, to disclose the detailed reasons for the encumbrance where the combined encumbrance reaches or exceeds 50% of their holding in the company or 20% of the total share capital. A carve-out exists for scheduled commercial banks, public financial institutions and certain notified non-banking financial companies pledging shares in the ordinary course of lending, so that routine secured lending does not generate spurious takeover-code filings. The conceptual link to Regulation 29 is that both treat changes in beneficial position — whether by outright transfer or by encumbrance — as reportable events.

Disclosure versus the creeping-acquisition limit

Students frequently conflate the Regulation 29 disclosure thresholds with the substantive acquisition ceilings, but they operate on different planes. The 5% and 2% figures in Regulation 29 are information triggers — they tell the acquirer when to file, not how much it may buy. The substantive limit on buying is the creeping-acquisition allowance, which permits a holder between 25% and the maximum permissible non-public shareholding to acquire up to 5% of voting rights in a financial year without an open offer. A holder may therefore comply perfectly with Regulation 29 (by disclosing every 2% swing) yet still breach the creeping limit (by acquiring more than 5% in the year), or vice versa. The two regimes are cumulative: an acquirer must satisfy both. The historical predecessor of these provisions, and the move from the 1997 to the 2011 framework, is traced in the chapter on the introduction and evolution from the 1997 Regulations.

Continuity with the 1997 Regulations

The disclosure philosophy is not new to 2011. Under the SEBI (SAST) Regulations, 1997, Regulations 7 and 8 performed analogous functions: Regulation 7 required disclosure on crossing 5%, 10%, 14%, 54% and 74%, while Regulation 8 mandated annual disclosures. The 2011 framework rationalised this into the cleaner 5%-then-2% structure of Regulation 29 plus the annual Regulation 30 filings. Much of the case law decided under the 1997 disclosure provisions therefore continues to inform the 2011 regime, because the underlying principle — that substantial shifts in ownership must be transparent — is unchanged. In SEBI v. Akshya Infrastructure Pvt. Ltd., for instance, acquisitions across several financial years breached the then-applicable creeping limit and triggered disclosure and open-offer obligations under the 1997 Regulations, illustrating how the disclosure and substantive duties have always travelled together. The Tribunal and the courts have drawn on this continuity when applying the strict-liability standard to Regulation 29.

One genuine change of substance is worth flagging. The 1997 scheme set its disclosure milestones at fixed cumulative points (5%, 10%, 14% and so on), so a holder who moved between two milestones without crossing one had no fresh duty. The 2011 scheme replaced these static rungs with the rolling 2% test, which is both simpler and more demanding: it captures every meaningful change above the entry point rather than only movement across pre-set bands. The effect is to make the data feed almost continuous for active holders. Aspirants should be careful not to import the old milestone figures into a 2011 answer — the only thresholds that matter under Regulation 29 are 5% (entry) and 2% (subsequent change), with the higher Innovators Growth Platform figures as the lone exception.

Compliance mechanics and the System-Driven Disclosure framework

In practice, disclosure under Regulation 29 has become increasingly automated. SEBI's System-Driven Disclosure (SDD) framework, extended to the Takeover Regulations by a circular dated 7 March 2022, captures transactions executed in the depository system and generates disclosures under Regulations 29 and 31 automatically using PAN-based identification of promoters and major shareholders. This does not, however, transfer the legal responsibility away from the acquirer: the obligation to ensure a correct and timely filing remains with the person crossing the threshold, and SDD operates as a backstop rather than a substitute. The standardised formats for the various filings are prescribed by SEBI circular and must be used; a filing in the wrong format, or to only one of the two recipients, can itself be treated as defective. The lesson for the exam and for practice is the same: Regulation 29 rewards mechanical, calendar-driven compliance and punishes anything less, because liability does not turn on motive.