Capital Market and Securities Laws · Acquisition of Shares and Takeovers - Concepts

Section 15H SEBI Act: Penalty for Non-Disclosure of Acquisition

Updated 11 October 2026 · Fact-checked

Section 15H of the SEBI Act, 1992 penalises a person who fails to make a required disclosure of shareholding, public announcement, letter of offer or payment to selling shareholders in a takeover. The penalty is at least ₹10 lakh and may extend to ₹25 crore or three times the profits made from the failure, whichever is higher.

Understand Penalty for Non-Disclosure of Acquisition (Section 15H)

When someone buys a large stake in a listed company, other shareholders need to know. They also need a fair chance to sell at a fair price if control changes. The takeover rules made under the SEBI Act create these duties. Section 15H is the penalty section that backs them.

Section 15H applies to any person who is required under the Act, or its rules or regulations, to do certain things and fails to do them. It is not limited to promoters or companies. The acquirer is the usual person caught.

The section lists four defaults:

failing to disclose the aggregate of your shareholding in the body corporate before you acquire any shares of it;
failing to make a public announcement to acquire shares at a minimum price;
failing to make a public offer by sending a letter of offer to the shareholders of the concerned company;
failing to pay the consideration to shareholders who sold their shares pursuant to the letter of offer.

The penalty has a floor and a ceiling. It shall not be less than ten lakh rupees. It may extend to twenty-five crore rupees or three times the amount of profits made out of the failure, whichever is higher. So the penalty is tied to the gain when the gain is large.

Remember how this fits with Section 12A. Section 12A prohibits acquiring control or securities beyond the permitted percentage in contravention of the regulations. Section 15H is the penalty for failing to follow the disclosure and open offer steps. The detailed triggers, thresholds and timelines sit in the takeover regulations, not in Section 15H itself.

Key rules to remember

Who is liable: Any person required under the SEBI Act, rules or regulations who commits a listed default; The duty must arise from the Act, rules or regulations. The section does not name the acquirer specifically.
Four defaults under Section 15H: (i) no disclosure of aggregate shareholding before acquiring; (ii) no public announcement to acquire at a minimum price; (iii) no public offer by letter of offer; (iv) no payment of consideration to shareholders who sold under the letter of offer; Clauses (iii) and (iv) were added in 2002. Learn all four.
Penalty amount: Minimum ₹10 lakh; maximum = higher of ₹25 crore or 3 × profits made out of the failure; The word is 'whichever is higher'. Do not write 'lower'.
Penalty range check: Penalty ≥ ₹10,00,000 and ≤ higher of (₹25,00,00,000, 3 × profit); Use this to test any figure given in a question.

How to solve Penalty for Non-Disclosure of Acquisition (Section 15H) questions

Use this method for any question on Section 15H, whether it asks for the penalty, an application to facts, or a short note.

1Identify the person and check that the law (Act, rules or regulations) required them to act.
2Identify the exact failure and match it to one of the four clauses: disclosure of shareholding, public announcement, letter of offer, or payment of consideration.
3If no clause matches, say Section 15H does not apply on those facts and look at other provisions, such as Section 15A for failure to furnish information to SEBI.
4State the penalty: not less than ₹10 lakh, up to ₹25 crore or three times the profit from the failure, whichever is higher.
5If profit is given, compute three times the profit and compare it with ₹25 crore. Take the higher figure as the ceiling.
6Write the conclusion: the person is liable to a penalty within that range. Say the actual amount is fixed within the range, not automatically the maximum.
7 Cite the Act and Section 15H in the conclusion.

Quickest way: Four defaults, one range

When to use it: Use this when you have only a few minutes for a short-answer or application question.

Name the default in one line and match it to its clause.
Write the range: minimum ₹10 lakh, maximum the higher of ₹25 crore or three times the profit.
If profit is given, compute 3 × profit and pick the higher ceiling.
Close with: liable to penalty under Section 15H of the SEBI Act, 1992.

Common mistakes in Penalty for Non-Disclosure of Acquisition (Section 15H)

Writing the maximum as only ₹25 crore.
Students remember the headline figure and forget the profit-based limb.
Fix: Always write '₹25 crore or three times the profit, whichever is higher'.
Saying the penalty is fixed at ₹25 crore.
Students read the ceiling as the penalty.
Fix: State that the penalty is a range with a minimum of ₹10 lakh and a ceiling. The amount is decided within it.
Listing only disclosure and open offer, and missing the payment default.
The last clause, failure to pay consideration to selling shareholders, is easy to overlook.
Fix: Remember all four: disclosure, public announcement, letter of offer, payment.
Applying the per-day penalty of ₹1 lakh per day, capped at ₹1 crore, to Section 15H.
Sections 15A, 15B and 15D use that pattern and students blend them.
Fix: Section 15H has no per-day structure. It has a ₹10 lakh floor and a high ceiling.
Confusing Section 15H with Section 12A.
Both deal with acquisitions and control.
Fix: Section 12A is the prohibition (no person shall acquire control or securities above the percentage in contravention of regulations). Section 15H is the penalty for the listed non-disclosure and open offer failures.
Quoting thresholds such as 25% or 5% as if they are in Section 15H.
Students mix the penalty section with the takeover regulations.
Fix: Say that the section only penalises failure of duties imposed elsewhere. Cite thresholds only if you are sure of them from the regulations.

Worked examples

Example 1

An acquirer was required under the takeover regulations to make a public announcement to acquire shares at a minimum price but did not. SEBI finds that he made a profit of ₹12 crore from the failure. State the maximum penalty he can face under Section 15H of the SEBI Act, 1992.

Show the solution

Provision: Section 15H penalises a person required under the Act, rules or regulations who fails to make a public announcement to acquire shares at a minimum price.
Facts: the acquirer was required to make the announcement and did not. This is a default under clause (ii).
Ceiling limb 1: ₹25 crore.
Ceiling limb 2: 3 × ₹12 crore = ₹36 crore.
The section says 'whichever is higher', so the ceiling is ₹36 crore.
The minimum penalty is ₹10 lakh.

Answer: The acquirer is liable to a penalty of not less than ₹10 lakh, which may extend up to ₹36 crore, being three times the profit, as this is higher than ₹25 crore.

Example 2

Mr. Rao, who holds shares in Sagar Textiles Ltd., is about to acquire more shares. He is required by the regulations to disclose his aggregate shareholding before acquiring, but he does not. He made no profit from this. Is he liable under Section 15H? What is the penalty range?

Show the solution

Provision: Section 15H covers a person who is required under the Act, rules or regulations and fails to disclose the aggregate of his shareholding in the body corporate before he acquires any shares of it.
Facts: the regulations required prior disclosure and Mr. Rao did not make it. This fits clause (i).
Penalty floor: ₹10 lakh.
Ceiling: the higher of ₹25 crore or three times the profit. Profit is nil, so three times profit is nil. The higher figure is ₹25 crore.

Answer: Yes, Mr. Rao is liable under Section 15H of the SEBI Act, 1992. The penalty shall not be less than ₹10 lakh and may extend to ₹25 crore. The actual amount is fixed within this range.

Exam tips

Write the four defaults as a numbered list. Examiners look for all four.
Always give both the floor (₹10 lakh) and the ceiling (₹25 crore or three times profit, whichever is higher).
In case-study questions, match the facts to a clause first, then state the penalty, then conclude with the section.
Do not quote takeover thresholds unless the question gives them or you are certain of them. Keep the answer on the penalty.
If asked to distinguish from other penalty sections, remember that 15A, 15B, 15D, 15E and 15EB use the ₹1 lakh per day pattern capped at ₹1 crore, while 15H has a ₹10 lakh floor.

Practice questions from Acquisition of Shares and Takeovers - Concepts

Penalty for Non-Disclosure of Acquisition (Section 15H): frequently asked questions

What is the penalty under Section 15H of the SEBI Act?

The penalty shall not be less than ₹10 lakh. It may extend to ₹25 crore or three times the profits made out of the failure, whichever is higher.

Does Section 15H apply only to failure to make an open offer?

No. It covers four defaults: not disclosing aggregate shareholding before acquiring, not making a public announcement at a minimum price, not making a public offer by letter of offer, and not paying consideration to shareholders who sold under the letter of offer.

Is the penalty under Section 15H charged per day?

No. Unlike Sections 15A, 15B and 15D, Section 15H does not use a per-day penalty. It has a minimum of ₹10 lakh and a ceiling.

How is Section 15H different from Section 12A?

Section 12A prohibits manipulative devices, insider trading and acquiring control or securities beyond the permitted percentage in contravention of the regulations. Section 15H is the penalty for failing the specific disclosure and offer duties listed in it.