Most open offers under the Takeover Code are reluctant affairs — an acquirer crosses a numerical line and the law drags it to the public, gun to its head. Regulation 6 is the rare provision that runs the other way. It lets an acquirer who already holds at least twenty-five per cent volunteer for an open offer it was never obliged to make, usually to consolidate control, signal confidence, or buy out minorities without waiting for the slow drip of creeping acquisition. The catch is that volunteering is not a soft option: once the public announcement is out, the acquirer is locked in by a 52-week look-back bar, a minimum 10% size, a six-month post-offer freeze, and — as the Supreme Court made brutally clear in SEBI v. Akshya Infrastructure Pvt. Ltd. — an almost iron rule against withdrawal even when the deal turns ruinous. This chapter dissects Regulation 6 clause by clause against its verified bare text, and situates it within the wider machinery of the SEBI Takeover Code.
What a Voluntary Open Offer Is — and Is Not
The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 build the open offer machinery around compulsion. Regulation 3 forces an offer when an acquirer crosses the 25% line or breaches the 5% annual creeping limit; Regulation 4 forces one on the acquisition of control; Regulation 5 forces one on certain indirect acquisitions. Each is a mandatory or triggered offer — the acquirer did something that the law treats as significant enough to require giving public shareholders an exit.
Regulation 6 is the sole standalone voluntary offer. Here the acquirer has crossed no line and breached no limit; it simply elects to make an open offer it could lawfully have avoided. The bare text of Regulation 6(1) says an acquirer holding "twenty-five per cent or more but less than the maximum permissible non-public shareholding" "shall be entitled to voluntarily make a public announcement of an open offer." The word "entitled" — not "required" — is the whole character of the provision.
Why volunteer? A promoter sitting at, say, 40% may want to move decisively towards the 75% ceiling, demonstrate commitment to the market, pre-empt a hostile raider, or simply consolidate without the multi-year wait that creeping acquisition imposes. The trade-off is that the moment the acquirer steps into the open-offer arena, the entire procedural and pricing apparatus of the Code — offer size, pricing, escrow, the letter of offer, the bar on withdrawal — applies with full force. There is no "voluntary-lite" regime.
The Bare Text of Regulation 6
Accuracy on the bare provision matters because examiners test the exact thresholds. Regulation 6(1) provides that an acquirer who, together with persons acting in concert (PACs), holds shares or voting rights entitling them to exercise "twenty-five per cent or more but less than the maximum permissible non-public shareholding" shall be entitled to voluntarily announce an open offer, "subject to their aggregate shareholding after completion of the open offer not exceeding the maximum permissible non-public shareholding."
The "maximum permissible non-public shareholding" is the ceiling above which a listed company would fail the minimum public shareholding requirement — in practice 75% for most listed companies under the Securities Contracts (Regulation) Rules, 1957. So the voluntary-offer window is, broadly, the band between 25% and 75%.
Two provisos to Regulation 6(1) follow. The first is the 52-week eligibility bar (examined below). The second provides that "during the offer period such acquirer shall not be entitled to acquire any shares otherwise than under the open offer" — sealing off side-acquisitions while the voluntary offer is live. Regulation 6(2) imposes a six-month post-completion freeze, Regulation 6(3) carves out bonus and stock-split shares, and Regulation 6(4) reads "twenty-five per cent" as "forty-nine per cent" for entities listed on the Innovators Growth Platform. Each is unpacked in turn.
The 25% Floor and the Sub-25% Acquirer
Regulation 6 is available only to an acquirer already at or above 25%. This floor is deliberate. The 25% threshold is the same line that the Code treats as the gateway to control under Regulation 3(1) — the point at which the law presumes an acquirer has acquired "substantial" influence. Below that line, an acquirer cannot use the voluntary-offer route at all; if it wants to make a public offer, it must do so under the mandatory provisions, and the offer-size rule that bites is the larger 26% figure under Regulation 7(1), not the lighter 10% voluntary size.
This dovetails with the structure explored in the 25% substantial-acquisition threshold. A holder who is below 25% and wishes to cross it does so under Regulation 3(1), which itself triggers a mandatory offer for at least 26%; Regulation 6 simply does not apply to that crossing. The voluntary route is a tool for those already inside the control zone who wish to deepen their position, not a backdoor for outsiders to enter it on cheaper terms.
The Innovators Growth Platform carve-out in Regulation 6(4) shifts this floor: for a company that has listed its specified securities on the IGP, every reference to "twenty-five per cent" in Regulation 6 is read as "forty-nine per cent." The policy logic is that IGP issuers attract sophisticated, often concentrated, investor bases, so the control-zone floor is set higher before the voluntary-offer apparatus becomes available.
The 52-Week Eligibility Bar (First Proviso)
The most heavily tested feature of Regulation 6 is its first proviso. It reads: "Provided that where an acquirer or any person acting in concert with him has acquired shares of the target company in the preceding fifty-two weeks without attracting the obligation to make a public announcement of an open offer, he shall not be eligible to voluntarily make a public announcement of an open offer for acquiring shares under this regulation."
The rationale is anti-abuse. The Code permits a 25%-plus shareholder to creep up by 5% a year under Regulation 3(2) without an open offer. If such an acquirer could freely creep and then immediately fire off a voluntary offer at a price anchored to recent low market prices, it would defeat the protective purpose of the open-offer mechanism — minorities would be squeezed at depressed prices. The 52-week bar forces a choice: an acquirer that has used the cheaper creeping route in the past year cannot simultaneously claim the voluntary-offer route. It must wait out the look-back window.
Two qualifications save the proviso from being a trap. First, Regulation 6(3) provides that "shares acquired through bonus issue or stock splits shall not be considered for purposes of the dis-entitlement set out in this regulation" — corporate-action shares do not poison eligibility, because no real "acquisition" of fresh stake occurs. Second, the proviso bites only on acquisitions made "without attracting the obligation to make a public announcement"; shares already acquired pursuant to an open offer do not count against the acquirer. SEBI granted a temporary relaxation from the first proviso until 31 March 2021 by the 2020 amendment, a pandemic-era easing now spent.
The Offer-Period Bar (Second Proviso)
The second proviso to Regulation 6(1) is short but absolute: "Provided further that during the offer period such acquirer shall not be entitled to acquire any shares otherwise than under the open offer." Once the voluntary offer is announced, the acquirer cannot top up by market purchases, preferential allotment, or private deals; every share it acquires during the offer period must come through the open offer itself.
This contrasts sharply with the position of a mandatory acquirer, who in some circumstances may make permitted acquisitions during the offer period subject to disclosure and price-revision rules. The voluntary acquirer gets no such latitude. The logic is integrity of price: having volunteered for an offer, the acquirer must not be able to manipulate the market price — and therefore the offer price benchmark — by parallel buying. The bar keeps the voluntary offer clean and ensures that public shareholders tender against a single, transparent price rather than a moving target distorted by the acquirer's own off-market accumulation.
The Six-Month Post-Completion Freeze: Regulation 6(2)
Regulation 6(2) provides that an acquirer (with PACs) who has made a voluntary offer under Regulation 6 "shall not be entitled to acquire any shares of the target company for a period of six months after completion of the open offer except pursuant to another voluntary open offer." A proviso clarifies that this restriction "shall not prohibit the acquirer from making a competing offer" if some other person launches an open offer in the interim.
The six-month freeze is the price of using the voluntary route. It prevents an acquirer from gaming the system by making a small voluntary offer and then immediately resuming creeping acquisitions — effectively stacking the two mechanisms to accumulate rapidly while paying open-offer prices only once. By compelling a cooling-off period, Regulation 6(2) ensures that a voluntary offer is a discrete, deliberate event rather than the opening move in a continuous accumulation campaign.
The two exceptions are coherent. A further voluntary open offer is permitted because that simply repeats the same protective, transparent mechanism. A competing offer in response to a third party's open offer is permitted because barring it would leave the target's shareholders worse off — the acquirer should be able to defend its position and the competing-offer regime under Regulation 20 supplies its own safeguards. Crucially, Regulation 20(3) provides that an open offer made within the competing-offer window "shall not be regarded as a voluntary open offer under regulation 6", so a competing offer is governed by the competing-offer rules, not by Regulation 6's eligibility conditions.
Offer Size: The 10% Rule under Regulation 7(2)
The offer size for a voluntary offer is governed not by Regulation 6 but by Regulation 7(2). Its verified text requires that an open offer under Regulation 6 "shall be for acquisition of at least such number of shares as would entitle the holder thereof to exercise an additional ten per cent of the voting rights in the target company," capped so as not to breach the maximum permissible non-public shareholding.
Note the precision examiners look for. The mandatory offer size under Regulation 7(1) is at least 26% of total shares ("twenty six per cent of total shares of the target company" as of the tenth working day after the tendering period closes). The voluntary size is 10%, and it is framed as an additional ten per cent of voting rights — the word "additional" being key, and the reference to "voting rights" being a 2018 amendment that replaced the earlier "total shares of". The contrast is logical: a mandatory offer is a meaningful exit window forced on minorities, so it is larger; a voluntary offer is a chosen consolidation step, so a 10% floor suffices to make it a genuine offer rather than a token gesture.
Regulation 7(2) also lets a voluntary acquirer increase the offer size if a competing offer is made, within fifteen working days of the competing announcement. And Regulation 7(3) provides that if a voluntary acquirer opts to increase the size, the offer is then "deemed to have been made under sub-regulation (2) of regulation 3" — converting the voluntary offer into a creeping-route mandatory offer for the purpose of the rest of the Code. For the underlying entry rules see the trigger for an open offer.
Pricing the Voluntary Offer: Regulation 8
A voluntary offer is priced under the same Regulation 8 grid that governs Regulations 3, 4 and 5. The bare text of Regulation 8(1) provides that the offer price for shares acquired "under regulation 3, regulation 4, regulation 5 or regulation 6" shall be not lower than the price determined under sub-regulation (2) for a frequently traded share. There is no discount for volunteering.
The Regulation 8(2) benchmarks for a direct acquisition of a frequently traded share take the highest of several reference points: the highest negotiated price under any agreement triggering the offer; the volume-weighted average price of acquisitions by the acquirer and PACs during the 52 weeks preceding the public announcement; the highest price paid by the acquirer or PACs in the 26 weeks preceding the public announcement; and the volume-weighted average market price for the 60 trading days preceding the public announcement on the stock exchange with the highest volume. The price floor is therefore the most generous of these to public shareholders, ensuring minorities are not short-changed merely because the acquirer chose the voluntary route.
This pricing discipline is also why the 52-week eligibility bar matters so much. An acquirer that has been quietly creeping at depressed prices cannot leap into a voluntary offer anchored to those same low prices, because the bar makes it ineligible in the first place — and even where eligible, the look-back pricing benchmarks would capture any recent high-priced buying.
Conditional Offers and Minimum Acceptance
A recurring examination point is whether a voluntary offer can be made conditional on a minimum level of acceptances. Under Regulation 19, an offer may be made conditional as to the minimum level of acceptances only where the acquirer and PACs do not acquire shares if the condition is not met, and where any underlying agreement is similarly conditional. In practice a voluntary offer is not commonly used to acquire control afresh — the acquirer is already at 25%-plus — so the conditional-acceptance device is less central than in a control-acquisition mandatory offer.
What is clear from the structure is that a voluntary acquirer cannot use conditionality to escape the offer once announced. The conditions permitted by the Code are narrow and prescribed; they are not a general escape hatch for an acquirer that has had second thoughts. This anti-abuse posture is exactly what the Supreme Court enforced in the withdrawal jurisprudence discussed next.
Withdrawal: SEBI v. Akshya Infrastructure and the Sanctity of the Offer
The single most important judicial gloss on the voluntary offer is Securities and Exchange Board of India v. Akshya Infrastructure Pvt. Ltd., (2014) 11 SCC 112 (decided 25 April 2014). Because the offer there had been announced just before the 2011 Regulations took effect, the case was decided under the corresponding withdrawal provision (Regulation 27) of the SEBI (SAST) Regulations, 1997 — but its reasoning governs the 2011 Code, whose withdrawal provision (Regulation 23) is materially the same.
Akshya had voluntarily announced an open offer for shares of Marg Ltd. SEBI then sat on the draft letter of offer for some thirteen months. By the time clearance came, the market price had moved and the offer had become, in the acquirer's words, financially unviable. Akshya sought to withdraw, arguing that a voluntary offer should be more freely withdrawable than a triggered one, and that economic unviability was a valid ground. The Securities Appellate Tribunal allowed withdrawal; SEBI appealed.
The Supreme Court reversed the SAT and disallowed withdrawal. It held that the withdrawal provision refers simply to a "public offer" and draws no distinction between a triggered offer and a voluntary one — reading in such a distinction would amount to impermissibly reconstructing the provision. Economic unviability was rejected as a ground: a public offer, once made, can be withdrawn only in circumstances making it virtually impossible to perform. The Court warned that accepting unviability as a ground would "give a field day to unscrupulous elements in the securities market" to announce offers and then walk away when prices moved against them. While it rapped SEBI for the thirteen-month delay, that delay did not convert an unprofitable offer into an impossible one.
Why Akshya Matters for the Voluntary Acquirer
The practical takeaway from Akshya Infrastructure is that voluntariness ends at announcement. Up to the moment of the public announcement, the acquirer is genuinely free — it need not make the offer at all. After the announcement, the offer is as binding as a mandatory one. The acquirer cannot treat the voluntary offer as an option it can let lapse if the market turns; the law treats the public announcement as a near-irrevocable commitment to the target's shareholders.
This is the deep symmetry of Regulation 6: the Code gives the acquirer full freedom on the front end (no compulsion to offer) precisely because it imposes near-total rigidity on the back end (no easy withdrawal, a six-month freeze, and the 52-week bar). The voluntary route is generous in entry and unforgiving in exit. An acquirer contemplating a voluntary offer must therefore have financing and price certainty before it announces, because Akshya forecloses the escape route of pleading hardship afterwards. For the historical contrast with the 1997 regime under which Akshya arose, see the evolution from the 1997 Regulations.
Persons Acting in Concert and Aggregation
Regulation 6 operates on the holding of the acquirer "together with persons acting in concert with him." The 25% floor, the maximum-permissible-non-public-shareholding cap, the 52-week bar and the six-month freeze all apply to the acquirer and its PACs as an aggregated group, not to the acquirer in isolation. Mis-identifying the PAC group is therefore the most common way a voluntary offer goes wrong.
The leading authority on who counts as a PAC is Daiichi Sankyo Co. Ltd. v. Jayaram Chigurupati, (2010) 7 SCC 449. Arising from Daiichi's acquisition of Ranbaxy and the consequent indirect interest in Zenotech Laboratories, the Supreme Court held that persons acting in concert must actually come together with a shared objective of acquiring shares or control of the target, pursuant to an agreement or understanding — mere common ownership at a remove does not automatically make two entities PACs in relation to a given target. The Court emphasised that the "concert" must be referable to the target company in question.
For a voluntary offer this matters in two directions. An acquirer that wrongly excludes a true PAC may understate the group's holding and miscalculate eligibility or the offer cap; conversely, an entity wrongly swept into the PAC group may be saddled with the 52-week bar or the six-month freeze it never deserved. The definitional framework is developed further in the definitions chapter.
Voluntary versus Mandatory: A Structured Comparison
It helps to set Regulation 6 against the mandatory offers side by side. Trigger: a mandatory offer is compelled by crossing 25% (Regulation 3(1)), breaching the 5% creeping limit (Regulation 3(2)), acquiring control (Regulation 4), or certain indirect acquisitions (Regulation 5); a voluntary offer is chosen, with no trigger at all. Eligibility: any acquirer can be caught by a mandatory trigger; only an acquirer already at 25%-plus (49% for IGP) can use Regulation 6, and even then only if it clears the 52-week bar.
Size: mandatory offers are for at least 26% of total shares under Regulation 7(1); voluntary offers are for an additional 10% of voting rights under Regulation 7(2). Post-offer: a voluntary acquirer faces a unique six-month acquisition freeze under Regulation 6(2); a mandatory acquirer faces no equivalent standalone freeze. Withdrawal: both are equally hard to withdraw — Akshya Infrastructure confirmed there is no withdrawal advantage to volunteering.
Pricing: identical — both run on the Regulation 8 highest-of benchmarks. The upshot is that the voluntary route is not a cheaper or softer path to the same destination; it is a path with a different entry condition (choice rather than trigger) but the same exit discipline. An acquirer near a trigger will sometimes prefer to volunteer cleanly under Regulation 6 rather than risk an inadvertent breach of Regulation 3, precisely because the consequences of crossing are so similar either way.
Common Exam and Practice Pitfalls
Several traps recur. First, the size figures: candidates routinely write "26% for voluntary" — wrong; 26% is the mandatory size under Regulation 7(1), while the voluntary size is an additional 10% of voting rights under Regulation 7(2). Second, the look-back periods: the eligibility bar is 52 weeks, while the pricing look-back under Regulation 8 uses 26 weeks (highest price) and 60 trading days (VWAP) — do not conflate them.
Third, the floor: Regulation 6 is unavailable below 25% (49% for IGP companies), so a sub-25% acquirer cannot use it. Fourth, the bonus/split carve-out: shares from bonus issues or stock splits do not count for the 52-week dis-entitlement (Regulation 6(3)). Fifth, the competing-offer point: an offer made within the competing-offer window is expressly not treated as a voluntary offer under Regulation 6 (Regulation 20(3)), and the six-month freeze does not bar a competing offer.
Finally, the withdrawal rule: never say a voluntary offer can be freely withdrawn because it was voluntary — SEBI v. Akshya Infrastructure squarely forecloses that, holding that economic unviability is no ground and that the withdrawal provision draws no line between voluntary and triggered offers. Master these six points and Regulation 6 becomes a reliable source of marks rather than a source of avoidable errors.
Frequently asked questions
Who is eligible to make a voluntary open offer under Regulation 6?
An acquirer who, together with PACs, already holds 25% or more but less than the maximum permissible non-public shareholding (broadly 75%). For an Innovators Growth Platform company, the floor is read as 49% under Regulation 6(4). A sub-threshold acquirer cannot use Regulation 6 at all.
What is the minimum size of a voluntary open offer?
Under Regulation 7(2), at least such number of shares as would entitle the holder to exercise an additional 10% of voting rights in the target, capped at the maximum permissible non-public shareholding. This contrasts with the 26% minimum size for mandatory offers under Regulation 7(1).
What is the 52-week bar in Regulation 6?
The first proviso to Regulation 6(1) makes an acquirer ineligible to volunteer an offer if it or any PAC acquired shares of the target in the preceding 52 weeks without attracting an open-offer obligation, e.g. through creeping acquisition. Bonus and stock-split shares are excluded by Regulation 6(3).
Can a voluntary open offer be withdrawn if it becomes financially unviable?
No. In SEBI v. Akshya Infrastructure Pvt. Ltd., (2014) 11 SCC 112, the Supreme Court held that economic unviability is not a ground for withdrawal and that the withdrawal provision draws no distinction between voluntary and triggered offers. An offer once announced can be withdrawn only where it is virtually impossible to perform.
What restrictions apply after a voluntary open offer is completed?
Regulation 6(2) bars the acquirer and PACs from acquiring any further shares of the target for six months after completion, except pursuant to another voluntary open offer. The proviso preserves the acquirer's right to make a competing offer if a third party launches an open offer in that period.
How is the price of a voluntary open offer fixed?
Under Regulation 8, identically to a mandatory offer. For a frequently traded share the floor is the highest of the negotiated price, the 52-week VWAP of the acquirer's acquisitions, the highest price paid in the preceding 26 weeks, and the 60-trading-day VWAP before the public announcement. There is no pricing discount for volunteering.