The government will notify the new rules for corporate mergers and acquisitions on May 5, following which it will be mandatory for companies to seek the Competition Commission”s approval for high voltage deals, Chairman Dhanendra Kumar said today. “By May 3-4, the rules will be finalised and by May 5, we will notify the same. And by June 1, the provisions relating to mergers and acquisition approvals would come into effect,” Kumar told reporters on the sidelines of an AMCHAM event here.
The Competition Commission of India (CCI) has notified Sections 5 and 6 of the Competition Commission Act, 2002, dealing with mergers and acquisition (M&A) last month, but it is yet to finalise the rules.
When implemented, the norms would require companies to seek the CCI”s approval for domestic and cross-border M&As.
The CCI is working with corporate law experts and industry representatives to get their feedback on the draft merger regulations.
“We have also extended the date for receiving comments on the norms and are holding exhaustive consultations with various stakeholders to ensure a smooth competition regime,” he said.
While he did not give any explicit indication of the changes that could be expected in the draft regulations, Kumar hinted that the commission is looking into the issue of exempting routine transactions from the purview of the competition law.
“We are also studying the forms and seeing if we can rework on it,” he added.
Coming June 1, all large companies would require to seek the CCI”s approval before going ahead with mergers and acquisitions. The CCI has been empowered to do so with the notification of Sections 5 and 6 of the Competition Act, 2002.
According to the provisions in the Act, companies with a turnover of over Rs 1,500 crore will have to approach the CCI for approval before merging with another firm.
Among other things, the CCI would take a prima facie view on the proposed combinations within a month of filing by the companies, addressing a major concern of the industry about the time limit the body would take to vet mergers.
Also, the maximum time limit the CCI would take to vet mergers has been reduced to 180 days from the earlier 210 days after facing opposition from the industry.
Only those proposals would need the CCI”s nod where the companies have combined assets of Rs 1,000 crore or more, or a combined turnover of Rs 3,000 crore or more.
Also, the target company”s net assets have to be a minimum of Rs 200 crore or it should have a turnover of Rs 600 crore for CCI intervention.