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of <h1>SEBI Investor Protection: Mandatory Open Offer After 25% Stake, Promoter Shareholders Cannot Be Excluded Based On Letters</h1> <h3>3A Capital Services Limited Versus Securities and Exchange Board of India</h3> The SAT (LB) at Mumbai upheld SEBI's position that once the appellant crossed the 25% shareholding threshold, it was mandatorily required to make an open ... Seeking permission to Implead the promoters/shareholders holding shares as party respondents - Open offer to the remaining public shareholders excluding those who act or acted in concert with the acquirer or the seller - HELD THAT:- SEBI submitted that once appellant has crossed the threshold limit of 25%, he is duty bound to make an open offer and promoter shareholders holding who hold about 65% cannot be excluded based on such correspondence. He submitted that there is nothing on record to suggest that the said promoter shareholders may not accept the open offer. They are not parties in these proceedings - SEBI is right in his submissions. Permission to implead the promoters/shareholders holding 65% shares as party respondents is granted. Appellant is permitted to amend the cause tile and file the necessary application within a week. Appellant, an investor, acquired in excess of the 25% threshold in Sri Sarvaraya Sugars Limited and thus 'was required to give an open offer' to remaining shareholders. One promoter sold shares to the appellant; other promoter-shareholders holding about 65% declared they were not desirous of selling and informed SEBI and the merchant banker. SEBI contended that such correspondence related to acquisition of pre-25% shares and, once the appellant crossed the 25% threshold, he is 'duty bound to make an open offer'; those promoters cannot be excluded on the basis of prior correspondence and there is nothing to show they 'may not accept the open offer.' Tribunal agreed with SEBI's legal position. Appellant was granted leave to amend the cause title and implead the promoter-shareholders as respondents, with liberty to file the necessary application within one week. Matter listed for further hearing on November 03, 2025.
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