Introduction
A Letter of Offer (LOF) is often seen as a transaction-specific document prepared to meet the procedural requirements of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (SAST Regulations). In practice, however, SEBI also treats the LOF as a document that must reflect complete regulatory truth.
Several adjudication orders show a consistent regulatory approach. SEBI uses the examination of the LOF to look back and identify past non-compliances, missed disclosures, and governance failures, even if these occurred many years earlier and were not questioned at the time.
The following four cases show how SEBI, while reviewing offer-related documents or trading activity, reconstructed historical conduct and imposed liability. Taken together, they explain why the sellers/ existing promoters of the Target Company must treat LOF diligence as a backward-looking compliance review, and not merely as a forward-looking disclosure exercise.
Case Studies
Case Study 1: Emkay Consultants Limited[1]
Missed open-offer triggers identified retrospectively
In this case, SEBI reviewed historical movements in shareholding of promoters and persons acting in concert over a period of several months. SEBI found that:
- Promoters were reclassified from public shareholders
- Multiple acquisitions crossed statutory thresholds
- Five separate open-offer triggers arose under Regulations 3(1), 3(2) of the SAST Regulations and Regulation 31A(5) of the SEBI LODR Regulations
- No open offer was made on any of these occasions
These violations were identified much later, and not at the time when the transactions actually occurred. SEBI rejected arguments relating to lack of trading activity, defunct stock exchange operations, or absence of investor harm.
Relevance to LOF:
This case shows that historical trigger events remain enforceable, and past failures can surface during later regulatory scrutiny.
Case Study 2: Mediaone Global Entertainment Limited[2]
Incorrect disclosures caused by outdated due diligence
In this matter, the merchant banker acted as the manager to the open offer. SEBI found that:
- The ownership of the foreign acquirer had changed before filing the Draft Letter of Offer (DLOF)
- The change was publicly available in records of the UK Companies House
- The merchant banker relied on earlier due diligence and representations made by the acquirer
- A due diligence certificate was issued stating that disclosures were “true and adequate”
SEBI held that the merchant banker failed to refresh its due diligence before filing the DLOF and LOF, and therefore certified disclosures that were factually incorrect.
Relevance to LOF:
SEBI clearly stated that due diligence is a continuing obligation, and reliance on client information does not remove the merchant banker’s duty to independently verify facts.
Case Study 3: Vinny Overseas Limited[3]
Persons acting in concert identified through trading behaviour
In Vinny Overseas, several individuals and entities acquired shares through market trades. SEBI observed that:
- Individually, the shareholdings appeared insignificant
- Collectively, the shareholding crossed the 5% threshold on multiple occasions
- No disclosures were made under Regulation 29 of the SAST Regulations
SEBI established the existence of persons acting in concert (PAC) based on:
- Family relationships
- Common promoters and directors
- Use of common IP and MAC addresses for trading
- Coordinated timing and pattern of acquisitions
Even though there were no formal agreements, SEBI held that concert could be inferred from conduct.
Relevance to LOF:
This case shows that historical accumulation patterns may later be treated as concerted acquisitions, raising issues of control and disclosure during examination of offer documents.
Case Study 4: Eiko Lifesciences Limited[4]
Historical non-compliance identified during LOF review
In this case, while examining the Draft Letter of Offer, SEBI identified alleged violations relating to non-disclosure of encumbrances on promoter shareholding under Regulation 31 of the SAST Regulations. These related to pledge and unpledge transactions that occurred before a later regulatory amendment exempted certain depository-level pledges from disclosure.
The noticee argued that the pledges were routine margin pledges created within the depository system and relied on later regulatory understanding to justify non-disclosure. SEBI rejected this argument, noting that at the time the transactions took place, no such exemption existed and the disclosure requirement under Regulation 31 of SAST Regulations was fully applicable.
SEBI clarified that during LOF scrutiny, past transactions are examined based on the regulatory framework applicable at the relevant time. Later amendments or evolved interpretations cannot be used to retrospectively cure earlier non-compliance. As a result, historical disclosure failures may come to light and be adjudicated only because an LOF is filed, even when the offer transaction itself is otherwise compliant.
Relevance to LOF:
Interpretive positions must be clearly explained and consistently applied, failing which SEBI may treat omissions as disclosure failures.
Conclusion
Taken together, these four cases send a clear regulatory message. SEBI treats the LOF as a window into the company’s past, and not merely as a document for the current transaction.
For merchant bankers, existing promoters and the sellers, the implications are clear:
- Past missed triggers, disclosure lapses, and control-building patterns do not disappear with time
- Due diligence must reconstruct historical conduct, not just verify present facts
- PAC analysis must go beyond declarations and examine relationships and behaviour
- Interpretive compliance positions must be transparent, consistent, and defensible
In essence, LOF preparation is not a procedural formality. It is a regulatory audit of historical conduct. If past non-compliances are not disclosed in the offer document, SEBI may identify them during scrutiny
[1] https://www.sebi.gov.in/enforcement/orders/nov-2025/adjudication-order-in-the-matter-of-emkay-consultants-limited_97949.html
[2] https://www.sebi.gov.in/enforcement/orders/nov-2025/adjudication-order-in-the-matter-of-mediaone-global-entertainment-limited_97673.html
[3] https://www.sebi.gov.in/enforcement/orders/oct-2025/adjudication-order-in-the-matter-of-investigation-in-the-trading-activities-of-certain-entities-in-the-scrip-of-vinny-overseas-ltd-_97493.html
[4] https://www.sebi.gov.in/enforcement/orders/jan-2026/adjudication-order-in-the-matter-of-eiko-lifesciences-limited_98889.html