CCI approves Max India demerger plan

Competition Commission has approved Max India's proposed corporate restructuring plan to vertically split the company through a demerger into three separate listed firms, including one for life insurance.
The proposed demerger plan "is not likely to have an appreciable adverse effect on competition in India," the fair trade regulator said in its order.
Upon the completion of the demerger, Max India is proposed to be named as Max Financial Services Ltd and would focus solely on the life insurance activity, through its 72.1 per cent stake in Max Life Insurance.
The Commission said that the proposed deal "will not result in any change in control over the demerger entities or the competitive landscape of the markets in which they operate".

The deal involves transfer of shareholding of Max in certain entities through which it operates different businesses to its subsidiaries -- Taurus Ventures Ltd and Capricorn Ventures Ltd.
Taurus and Capricorn, which were incorporated on January 1, 2015 for the sole purpose of facilitating the proposed combination, would hold all the investments of Max, apart from the Max Life Insurance Company Ltd.

The deal comprises a number of steps such as acquisition of shareholding of Max in the demerger entities by Taurus and Capricorn. Pursuant to the demerger, Max would continue to hold its remaining business including shares of Max Life Insurance in the same proportion.

Other steps involve cancellation of shares held by Max in Taurus and Capricorn and allotment of shares in the two subsidiaries to the shareholders of Max in the same proportion as the current shareholding.
"As a result, pursuant to the proposed combination, Max, Taurus and Capricorn will have the same shareholding structure as the existing shareholding structure of Max," the order said.
Max had approached CCI for its approval after its board had cleared the plan on January 27, 2015.