Informal Guidance: SEBI Clarifies Position on LODR Governance Compliance and SAST Creeping Acquisition Limits

The Securities and Exchange Board of India (SEBI) has recently issued informal guidance notes providing important clarifications on two distinct regulatory frameworks, which are discussed below: 

1. Mandatory Placement of Governance Report before the Full Board: Informal Guidance to Punjab National Bank

SEBI, in an informal guidance letter dated February 6, 2026 (Guidance, which can be viewed by clicking on this link), issued to Punjab National Bank (PNB), a listed public sector bank (PSB), clarified the interplay between the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) and the Reserve Bank of India (Commercial Banks – Governance) Directions, 2025 (RBI Directions).

• • Background: PNB sought SEBI’s guidance on whether the oversight of the quarterly Integrated Filing (Governance) Report (which is required to be placed before the Board of Directors under Regulation 27(2)(a) of the LODR Regulations read with the SEBI Circular dated December 31, 2024) could be delegated to a Board committee under Chapter II, Clause B(18)(v) of the RBI Directions, which permits PSBs to assign compliance-related matters to a Board committee. 

• • SEBI’s Clarification: SEBI clarified that the LODR requirement is different from and ‘not in contradiction with’ the RBI Directions, and therefore, monitoring by a Board committee under the RBI Directions cannot be regarded as compliance with the LODR Regulations. Accordingly, placing the governance compliance report before the full Board remains mandatory for all listed entities, including listed PSBs.

• • Takeaway: This Guidance underscores that the LODR Regulations operate as a self-contained framework, and directions / guidelines issued by a sectoral regulator (such as the RBI) containing permissive provisions cannot dilute the governance requirements prescribed thereunder. 

2. Creeping Acquisition Limit and Conversion of Share Warrants: Informal Guidance to Ambo Agritec Limited

SEBI, in an informal guidance letter dated December 12, 2025 (published after 3 months in accordance with the applicable rules) (Guidance, which can be viewed by clicking on this link), issued to Ambo Agritec Limited (Ambo Agritec), clarified the applicability of the creeping acquisition limit under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations) to the conversion of share warrants by promoters. 

• • Background: Ambo Agritec had issued 1,43,00,000 equity share warrants on a preferential basis in FY 2024–25, of which 90,00,000 were allotted to the promoter (Acquirer) and 53,00,000 to public allottees, with their tenure under Regulation 162(1) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) expiring on December 19, 2025. While public allottees fully exercised their conversion rights, the Acquirer had, during FY 2025–26, converted only 51,50,000 warrants, resulting in a gross acquisition of 4.95% in Ambo Agritec. The Acquirer proposed to convert the remaining 38,50,000 warrants, which would increase his holding from 54.65% to 62.02% (i.e., an increase of 7.37%). 

• • SEBI’s Clarification: SEBI analysed the transaction under Regulation 3(2) of the Takeover Regulations, which caps additional acquisitions at 5% of voting rights in any financial year for acquirers holding 25% or more. SEBI clarified that: (a) per the Explanation to Regulation 3(2), only gross acquisitions are relevant, regardless of any intermittent fall in shareholding; (b) the Acquirer had already acquired 4.95% on a gross basis, leaving headroom of only 0.05%; and (c) the ICDR Regulations do not provide any exemption from the Takeover Regulations. Accordingly, SEBI concluded that the proposed conversion (resulting in a gross acquisition of 7.37%) would breach the 5% creeping acquisition limit under Regulation 3(2) of the Takeover Regulations, and would attract the obligation to make a public announcement of an open offer. 

Takeaway: This Guidance reinforces that the creeping acquisition limit operates independently and is not overridden by the tenure provisions under the ICDR Regulations. The Guidance further clarifies that the creeping acquisition limit assumes relevance in case of warrants at the time of conversion, and not at the time of issuance.