By IANS,
New Delhi: The competition watchdog Wednesday notified new merger and acquisition norms, making it mandatory for large corporates to seek its approval before going in for high-value deals.
According to the regulations, firms having combined assets of Rs.1,500 crore or more, or a combined turnover of Rs.4,500 crore or more, will have to approach the Competition Commission of India (CCI) for its approval before going in for merger or acquisition.
As per the new rules, for the CCI to intervene, the company which is going to be acquired should have minimum net assets of Rs.200 crore or a turnover of Rs.600 crore.
The watchdog said it would take a view on the proposed deal within 180 days of the filing of notice by the companies and it could either approve the merger proposal, reject it or modify it, after studying the same.
The new norms come into effect from June 1 and will apply only to transactions where binding documents are executed on or after June 1 or in the case of mergers where the boards of directors approve the proposal on or after June 1.
“The regulations issued today are a step in the right direction. Industry may still have some concerns over the powers of the Commission to review acquisitions where control is not being acquired,” said Pallavi S. Shroff, senior partner at Amarchand Mangaldas, a major law firm.
The filing fees have also been reduced to Rs.50,000 in some cases and to Rs.10 lakh in others. The earlier fee structure ranged from Rs.10 lakh – Rs.40 lakh.
“The regulations issued today provide clarity on several issues of concern, including, whether transactions which have been executed but are not closed by June 1 would require CCI clearance, what is the trigger event for the filing requirement, and what types of transaction are unlikely to cause competition concerns,” Shroff said.