Across jurisdictions, the 25% + corridor represents a powerful minority-protection zone. In India, this provides a statutory veto over special resolutions; 25% triggers SEBI open offer obligations and sets the minimum public shareholder baseline. In the UK and Singapore, >25% confers veto power, beneficial ownership disclosure, and scheme-blocking ability. In the US, the effect is contractual—contingent upon supermajority provisions in the company’s charter. This is because this level allows a shareholder to block major structural decisions without holding majority control.
This explores why 25%+ represents a meaningful inflection in corporate governance and control, analyses its significance under key SEBI regulations, explains the historical linkage to the SBO regime, and offers a comparative snapshot of its treatment in a few other developed jurisdictions, namely the UK, Singapore, and USA.
Special resolutions require ≥75% of votes cast in favour for decision-making. Thus, a shareholder or group holding more than 25% voting power can block any special resolution—effectively vetoing the will of the majority. This enables a minority holder to prevent critical corporate actions, such as change of capital structure, amendment to the charter documents, further issuance of shares, reduction of share capital, removal of auditors, offering loans, guarantees, or investments exceeding prescribed limits and related party transactions crossing thresholds, to name a few.
While ordinary resolutions require only a simple majority (>50%), a 25% holder cannot secure passage of ordinary matters alone. The true inflection, therefore, is not at 25% but at 25%+ shareholding, which confers the ability to unilaterally block special resolutions.
The 25%+ threshold is foundational across SEBI’s regulatory architecture, serving as the mandatory open offer trigger, the minimum public shareholding (MPS) requirement and a boundary for creeping acquisitions, exemptions, and disclosure obligations.
Acquiring 25% or more voting rights triggers a mandatory open offer to minority shareholders of a publicly listed company witnessing a change of control. Acquirers holding 25% or more but less than the maximum permissible non-public shareholding (i.e., 75%) may only acquire up to 5% additional voting rights in a financial year without triggering another open offer by way of creeping acquisition. SEBI Regulations require listed companies to maintain at least 25% public shareholding. If public shareholding falls below 25%, it must be restored within twelve months. This signifies the strategic relevance of 25% shareholding in the corporate democracy.
It may not be out of place to mention that under the original Companies (Significant Beneficial Owners) Rules, 2018, a Significant Beneficial Owner (SBO) was defined to mean the one holding ≥25% beneficial interest or exercising significant influence/ control on a company. This aligned with international norms. Post-2018 amendments reduced the threshold to 10%, expanding scrutiny and transparency. However, the 25% standard remains relevant in legacy contracts, historical disclosures, and cross-jurisdictional comparisons.
For instance, in the UK, 25% shareholding is a pivotal threshold across multiple legal domains. The Persons with Significant Control (PSC) Regime mandates PSC registration for persons holding 25% shares or voting rights, or rights to appoint/ remove a majority of directors. This is a core component of the UK’s corporate transparency framework. Like India, UK special resolutions require 75% shareholders’ approval for article amendments, company name changes, capital reductions, disapplication of pre-emption rights, voluntary winding up, and re-registration as a public or a private company. The substantial shareholding exemption (SSE) usually works at the 10% level, but certain qualifying institutional investor (QII) rules reference 25%; and non-resident CGT on UK real estate applies when an investor holds ≥25% of a company deriving value from UK land.
Besides, in Singapore, the 25%> threshold influences governance, disclosure, and takeover mechanics. A >25% shareholder can block special resolutions relating to constitutional document amendments, change of name, capital reduction, alteration of objects, voluntary winding-up, and disposal of substantial assets of a Singaporean company. Entities holding >25% shares or >25% voting power qualify as “controllers” and must be recorded in the Register of Registrable Controllers (RORC), accessible to the Monetary Authority of Singapore and other law enforcement agencies. A >25% holder can effectively veto a scheme of arrangement since schemes require 75% approval in value.
The USA, particularly Delaware, does not impose statutory 25% thresholds for corporate actions. However, companies may contractually adopt supermajority provisions (67%–90%) in their certificates of incorporation or bylaws. In such cases, a >25% holder can block actions requiring 75% approval, but only if the governing documents provide for it. Thus, unlike India, the UK and Singapore, the US control mechanics are charter documents-driven and not statutory.
Blocks of 25% + often command a control premium, especially in companies with dispersed shareholding. 25% block does not operate as a statutory bright line that confers defined corporate rights. Instead, it serves as a strategic waypoint—a practical inflection point—on the path toward veto threshold, which is where blocking power over special resolutions truly crystallizes.
Counsel often use 24.9%, 25.01%, and 26% acquisition steps for precisely this reason, as governance influence and regulatory consequences begin to shift materially across this corridor. In essence, a 25.01% holder wields influence far beyond its economic stake, shaping corporate destiny through the ability to say “no” where others say “yes.”
About the authors: Puneet Shah is a Partner and Shubham Rustagi is an Associate at IC RegFin Legal.
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