Relaxing the rule on mergers and acquisitions to be vetted by it, the Competition Commission of India (CCI) has exempted acquisitions resulting in a cumulative control of up to 25 per cent of shareholding or voting rights from such scrutiny. The current practice sets the limit at 15 per cent.
Analysts say the change is in sync with market watchdog Sebi’s new takeover code, which raised the open offer trigger from 15 to 25 per cent of the shares acquired.
Besides, intra-group mergers or amalgamations involving enterprises wholly owned by group companies will escape CCI vetting.
However, companies that need to undergo CCI scrutiny will now have to spend several times more as the fee for normal M&A (merger and acquisition) scrutiny has been raised from Rs 50,000 to Rs 10 lakh and from Rs 10 lakh to Rs 40 lakh in cases where intense scrutiny is required.
| RULE CHANGES * Simpler application form for clarity and uniformity * Board-authorised company secretary permitted to sign M&A scrutiny applications along with managing director or director * Parties to provide details of value of assets and turnover, and copies of M&A agreement, board resolution, etc * A brief summary of the combination must be filed when filing notice |
In a statement on Friday, the CCI said amendments in the regulation were made keeping in view the fees charged by other regulatory authorities in India and abroad.
A CCI official said the effect of the changes on the number of M&As under scrutiny could not be gauged immediately. He said the amendment to the Competition Commission of India (Procedure in regard to the transaction of business relating to combination) Regulation, 2011 attempts to provide relief to corporate entities from making filings for combinations unlikely to raise competition concerns, reduce compliance requirements, make filings simpler and to move towards certainty in the application of the Competition Act.
The said regulation was notified in May last year.
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“The merger and acquisition process is now almost eight months old and the amendment is rational and logical, in tune with the global practice,” said Dhanendra Kumar, former CCI Chairman during whose tenure the initial regulations were notified.
Since July 2011, the Competition Commission has cleared 28 merger and acquisition applications. In none of those did it find any possibility of an adverse impact on competition.