Pre-Merger Notification India

Similar documents
Pre-Merger Notification Survey. INDIA Amarchand & Mangaldas & Suresh A. Shroff & Co

Pre-Merger Notification Survey. FINLAND Roschier, Attorneys Ltd.

Pre-Merger Notification Guide. MALAYSIA Skrine

Pre-Merger Notification Survey. JORDAN Ali Sharif Zu bi Advocates & Legal Consultants

Pre-Merger Notification South Africa

Pre-Merger Notification Latvia

. COMPETITION LAWS IN INDIA Analysis and Comparison India * US * EU

Pre-Merger Notification Survey. LATVIA Klavins & Slaidins LAWIN

Pre-Merger Notification Guide. FINLAND Roschier, Attorneys Ltd.

Pre-Merger Notification Guide. PERU Estudio Olaechea

Pre-Merger Notification Guide. TRINIDAD AND TOBAGO Hamel-Smith

COMPETITION COMMISSION OF INDIA PROCEDURE IN REGARD TO THE TRANSACTION OF BUSINESS RELATING TO COMBINATIONS) REGULATIONS, 2011

Pre-Merger Notification Guide. HUNGARY Nagy és Trócsányi

Pre-Merger Notification Guide. POLAND Wardynski & Partners

Pre-Merger Notification Guide. BRAZIL Demarest e Almeida Advogados

Pre-Merger Notification Survey. AUSTRIA Cerha Hempel Spiegelfeld Hlawati, Partnerschaft von Rechtsanwalten

G R Bhatia G R Bhatia

Competition Law & Corporate Restructuring

Sharing insights. News Alert 13 May, Competition Law- An update on Combination provisions effective 1 June, Background

Pre-Merger Notification Guide. CZECH REPUBLIC PRK Partners s.r.o. advokátní kancelár

THE BANKING LAWS (AMENDMENT) BILL, 2011

BE it enacted by Parliament in the Fifty-sixth Year of the Republic of India as follows:-

LAW. COMPETITION LAW Duties, Power AND Functions of Competition authorities in India: DG, CCI and COMPAT

Legislative Brief. The Companies Bill, Highlights of the Bill. Key Issues and Analysis

Evolution of Secretarial audit

MERGER REGIME IN SINGAPORE - MERGER PROCEDURES

Merger GuidelinesMerger Guidelines

Legislative Brief The Competition (Amendment) Bill, 2006

Mergers and Acquisitions Report 2016 Taiwan

INTERNATIONAL BAR ASSOCIATION ANTITRUST COMMITTEE WORKING GROUP ON INDIA'S PROPOSED MANDATORY MERGER NOTIFICATION REGIME

IFLR MERGER CONTROL SURVEY Guest edited by Nicole Kar. Merger Control Survey international financial law review

Merger Control Practical Aspects

Refunds. Chapter IX. FAQ s. Refund of tax (Section 54)

MERGER NOTIFICATION AND PROCEDURES TEMPLATE POLAND. January 2011

ICAI - WIRC. Case Study on Merger / Amalgamation - Taxation, Accounting and Company law. Speaker Amrish Shah, Partner, Transaction Tax

ANNEX II. SHORT FORM CO FOR THE NOTIFICATION OF A CONCENTRATION PURSUANT TO REGULATION (EC) No 139/2004

Pre-Merger Notification Manual

NEW CONCEPTS UNDER COMPANIES ACT, 2013

How Related Party Transactions are regulated in India? taxmann.com 59 (Article)

Failure of Corporate Governance at Satyam By Mr. Shardul S. Shroff, Amarchand Mangaldas

COMPOUNDING UNDER FEMA BY CA.SUDHA G. BHUSHAN. INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA 25 th July 2015

: 1 : Time allowed : 3 hours Maximum marks : 100. Total number of questions : 8 Total number of printed pages : 7

INTERNATIONAL BAR ASSOCIATION ANTITRUST COMMITTEE WORKING GROUP ON INDIA'S PROPOSED MANDATORY MERGER NOTIFICATION REGIME

Registration. Chapter VI

PAPER 13- CORPORATE LAWS & COMPLIANCE

The. Extraordinary Published by Authority. PART III Acts of the West Bengal Legislature. GOVERNMENT OF WEST BENGAL. LAW DEPARTMENT Legislative

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO OF 2015 COMPETITION COMMISSION OF INDIA VERSUS

Competition Laws In ASEAN Overview Of The Main Prohibitions

Amendments brought in by Finance Act, 2016

RELATED PARTY TRANSACTIONS POLICY BIRLA CORPORATION LIMITED

INSIDER TRADING, PROHIBITION OF SECURITIES AND EXCHANGE BOARD OF INDIA [PROHIBITION OF] INSIDER TRADING) REGULATIONS, 1992 CHAPTER I PRELIMINARY

JETAIRWAYS (INDIA) LIMITED RELATED PARTY TRANSACTION POILCY

~ THE TAXATION LAWS (AMENDMENT) ACT, # No. 16 of 2007 (As passed by the Houses of Parliament) $ [26th March, 2007.]

THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961 ARRANGEMENT OF SECTIONS

Bharati Law Review, Jan. March, nature of the combinations whether contravening competition law regime or not. Keywords: Combinations, Appreci

Composite Transactions and market purchases: Supreme Court upholds penalty for gun jumping in Thomas Cook and SCM Soilfert cases

Presentation. G.R. Bhatia, Partner Luthra & Luthra Law Offices 13 th June, 2008

Roundtable on Safe Harbours and Legal Presumptions in Competition Law - Note from Chile

PRESENTATION ON CORPORATE FAST TRACK INSOLVENCY RESOLUTION PROCESS FOR WIRC of Institute of Company Secretaries of India

333 NOTE : ALL PART A 333/1

INSIDER TRADING POLICY

COMPLIANCE CERTIFICATE

CA Mehul Shah B. Com, F.C.A., DISA (ICAI).

Law. Corporate Law Take over and acquisition of companies

Article. MCA relaxes controls on Managerial Remuneration: Professional Directors benefited. CS Aman Nijhawan

Levy and Collection of Tax

SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002* [54 OF 2002]

SIMPLEX INFRASTRUCTURES LIMITED

DISCUSSIONS ON SHELL COMPANIES, STRIKING OFF OF COMPANIES & DISQUALIFICATIONS OF DIRECTORS

Distribution Contracts: Overview from a European Perspective

THE INSURANCE ACT (Consolidated version with amendments as at 07 September 2016) ARRANGEMENT OF SECTIONS

Cayman Islands Takeover Guide

CLIENT PUBLICATION. China s New Anti-Monopoly Law Comes into Effect M&A Deals Subject to New Filing Thresholds

Restructuring of companies under the Companies Act, 2013

VLS FINANCE LIMITED Policy on materiality and dealing with related party transactions

Code of Conduct to Regulate, Monitor and Report Trading By Insiders

1.2 A CSR committee will have to be formed with at least 3 or more directors, at least one director being an independent director

ARTECH POWER PRODUCTS LIMITED CODE OF CORPORATE DISCLOSURE PRACTICES CODE OF CONDUCT FOR PREVENTION OF INSIDR TRADING

United States: Merger Control

CIRCULAR. CFD/DIL3/CIR/2017/21 March 10, All Listed Entities who have listed their equity and convertibles All the Recognized Stock Exchanges

Competition Commission of Mauritius Guidelines: GENERAL PROVISIONS

MORTGAGE BROKERAGES, MORTGAGE LENDERS AND MORTGAGE ADMINISTRATORS ACT. A Consultation Draft

Merger review and anti-competitive activity if there's no Brexit deal

RISK MANAGEMENT POLICY

JAMMU & KASHMIR. 1. Structure

JURISDICTIONAL NEXUS: CONNECTING LAWS IN THE EUROPEAN UNION AND INDIA INDIAN MERGER CONTROL JURISDICTIONAL THRESHOLDS

The Government of the UK s response to the European Commission s White Paper Towards more effective EU merger control

SUMMARY OF KEY RECOMMENDATIONS OF THE COMPANIES LAW COMMITTEE Recommending Amendments to the Companies Act of 2013

Audit & Auditors. Sec 139 Appointment of Auditors

LESSON OUTLINE LEARNING OBJECTIVES

Key Managerial Personnel means key managerial personnel as defined under the Companies Act, 2013

Chapter XII. Meetings of Board and its Powers. (Sections ) read with. The Companies (Meetings of Board and its Powers) Rules, 2014

POLICY FOR DETERMINING MATERIALITY FOR DISCLOSURE OF INFORMATION

[ADJUDICATION ORDER NO. PKB/AO 37/2011]

DIFFERENT TYPES OF COMPANIES SMALL COMPANIES ONE PERSON COMPANY

INTERGLOBE AVIATION LIMITED POLICY ON RELATED PARTY TRANSACTIONS

Important provisions of the Companies Act, 2013 Regarding Deposits

CARTELS UNDER THE COMPETITION ACT, 2002

LAW & PROCEDURE UNDER SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORMECEENT OF SECUIRTITY INTEREST ACT 2002

CENTRAL SALES TAX (REGISTRATION & TURNOVER) RULES, 1957 (as on 5th March 2014)

Transcription:

Updated: August 2006 Copyright Lex Mundi Ltd. 2006 Pre-Merger Notification India Is there a regulatory regime applicable to mergers and similar transactions? Mergers and acquisitions ( combinations ) are regulated by the Competition Act, 2002 which provides a statutory framework for the regulation of combinations qualifying for investigation. Additional Comments All provisions of the Competition Act have not been notified yet. The provisions relating to combinations have not been notified and consequently are not yet in force. The Parliament is also currently considering certain amendments to the Competition Act. A significant part of such amendments relates to the constitution of a Competition Appellate Tribunal, for hearing appeals from the Competition Commission of India, the authority constituted under the Act. Merger, acquisitions and takeovers in India are also regulated by two other legislations: (i) (ii) (iii) The Companies Act, 1956: Compromises, arrangements and reconstructions inter se between the members of a company or between members of a company and its creditors are dealt with under this Act; and Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (Takeover Code): Takeovers and substantial acquisition of shares are regulated under the Takeover Code. It should be noted that, the SEBI and the Company Law Tribunal are not required to examine competition law related issues. Identify Applicable National Regulatory Agency/ Agencies Competition Act The relevant body is the Competition Commission of India (the CCI ) established under the Act. Additional Comments Takeover Code The Securities and Exchange Board of India (hereinafter Board ) regulates the substantial acquisition of shares and takeovers under the Takeover Code. Companies Act

Presently the High Court, exercises supervision over compromises, arrangements and reconstructions of companies. However, the Companies Act has been amended to provide for the establishment of the Company Law Tribunal (hereinafter, Tribunal ), which will take over the original jurisdiction of the High Court in this regard once it is established. Is there a supranational regulatory agency (e.g., the European Commission) that has, or may have exclusive competence? If so, indicate. No. Are there pre-merger filing requirements; if so, where are they published? Notification of a merger is voluntary under the Competition Act. There are no statutory/ mandatory filing requirements as such. However, if it is determined that the statutorily specified threshold limits are crossed, and, the combination causes or is likely to cause Appreciable Adverse Effects on competition in India, the CCI may within one year investigate and declare such combination to be void, or it may direct that the Combination should not take effect, or suggest amendments to the proposed Combination. What kinds of transactions are caught by the national rules? (Identify any notable exceptions) The Act lays down certain threshold limits of a Combination which will trigger scrutiny by the CCI. These are as follows: Threshold Limits for Acquisition A. The Threshold limits in respect of Acquisitions are as follows: 1. When the acquirer and Target Company jointly have: - In India assets more than Rs. 1000 Crores 1 or turnover more than Rs. 3000 crores or, - In India or outside India aggregate assets of more than US $ 500 million or turnover of more than US $ 1500 million or 2. When the Group to which the Target Company would belong after the acquisition jointly has: - In India assets more than Rs. 400 crores or turnover more than Rs. 12000 crores or - Inside India or outside India aggregate assets more than US $ 2 billion or turnover more than US $ 6 billion B. When acquirer has direct or indirect control over another enterprise engaged in production, distribution or trading in similar, identical or substitutable goods or provision of service as the target company: 1. Target company and the enterprise over which acquirer has direct or indirect control, jointly have: - In India assets of more than Rs. 1000 crores or turnover of more than Rs. 3000 crores or - In India or outside India have aggregate assets of more than US$ 500 million or turnover of more than US$ 1500 million or 2. The group to which the target company belongs after the acquisition would along with 1 Conversion rate as of Nov. 16, 2006: 1 USD = Rs.45 (approximately), 1 EUR = Rs. 57 (Approximately) 2

Target Company have: - In India assets of more than Rs. 4000 crores or turnover of more than Rs. 12000 crores -In India & outside India aggregate assets of more than US$ 2 billion or turnover of more than US$ 6 billion Threshold Limits for Mergers and Amalgamations Any merger or amalgamation where: 1. Where the merged entity will have: - In India assets more than Rs. 1000 crores or turnover of more than Rs. 3000 crore or - In India & outside aggregate assets of more than US$ 500 million or turnover of more than US$ 1500 million or 2. The group to which the merged entity belongs has: - In India assets of more than Rs. 4000 crores or turnover of more than Rs. 12000 crores or - Inside or outside India have in the aggregate assets of more than US$ 2 billion or turnover of more than US$ 6 billion. Is there a size of transaction threshold? Yes. See above. Is there a size of turnover of the parties test; if so, what is it and how are size and turnover to be calculated? Yes. See above. Explanation (c) to Section 5 of the Competition Act provides that the value of assets of the parties shall be determined by taking the book value of the assets as shown, in the audited books of account of the enterprise, in the financial year immediately preceding the financial year in which the date of proposed merger falls, as reduced by any depreciation. As per S 2(y), turnover includes value of sale of goods or services. Additional Comments For the purposes of the Competition Act, the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collected mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout-design or similar other commercial rights. Is geographic scope/ national market effect of transaction an issue with respect to filing or approval requirements? If so, specify. 3

These are not mentioned as specific criteria in the Competition Act. However, since the CCI has to determine whether the combination has an appreciable adverse effect on competition in the relevant market in India, factors such as geographical scope may be relevant. Is the filing voluntary or mandatory? What are the penalties for non-compliance? Filing is voluntary. No question of penalties therefore arises. The CCI has the authority to suo moto look into any combination within one year of the Combination, once the statutorily prescribed thresholds are triggered.. Time in which a filing must be made Filing must be done within seven days of: The board of directors of the enterprise concerned approving the proposal of merger or amalgamation. The execution of any agreement or other document for such acquisition or the acquiring of control, shares, voting rights or assets by a person over an enterprise or when a person already has direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable good or service. Form and Content of Filing To be determined by Regulations, which are yet to be framed. Are filing fees required? To be determined by Regulations, which are yet to be framed. Is there an Automatic Waiting Period? If so, specify. There is a maximum time period of 90 working days from the date of publication of all information by the parties, within which the CCI has to make an order on the combination. Please see Chart I attached to this response for details on the various stages of investigation. Are there time limits within which the Regulatory Agency must Act? Can they be shortened by the parties or be extended by the regulatory agency? After the voluntary notification by the parties, or the suo moto enquiry by CCI into the combination, show cause notices are issued to the parties if the CCI is of the view that the combination has caused or is likely to cause an appreciable adverse effect on competition. Please refer to Chart 1 for a tabular representation of the time limits within which the CCI must act. CCI Procedure after Parties have submitted all information: Maximum time CCI can take to make its orders on a Combination is 90 days from date of publication by the parties of all information required by CCI. If CCI does not make any order stopping the combination within 90 days, then, combination is deemed to be approved. If parties to Combination seek time, then 90 days shall be computed after deduction extended time period. What is the substantive test for clearance? The test applicable is whether the combination has, or is likely to have, an appreciable adverse effect on competition within the relevant market in India. 4

Additional Comments The Competition Act provides the following list of factors that the Commission must consider for the analysis of Appreciable Adverse Effect to Competition: actual and potential level of competition through imports in the market; extent of barriers to entry into the market; level of combination in the market; degree of countervailing power in the market; likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins; extent of effective competition likely to sustain in a market; extent to which substitutes are available or are likely to be available in the market; market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination; likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in the market; nature and extent of vertical integration in the market; possibility of a failing business; nature and extent of innovation; relative advantage, by way of the contribution to the economic development, by any combination having or likely to have appreciable adverse effect on competition; whether the benefits of the combination outweigh the adverse impact of the combination, if any. 5

Updated: August 2006 Copyright Lex Mundi Ltd. 2006 What are the common Post-Filing Procedures: Requests for further information, etc? Please see Chart 1. Describe the sanction for not filing or filing and incorrect/incomplete notification. Since filing is voluntary, there are no sanctions for not filing. The CCI can, however, conduct suo moto investigations. In addition, Section 44 of the Act provides that if any person, being a party to a combination, (a) makes a statement which is false in any material particular, or knowing it to be false; or (b) omits to state any material particular knowing it to be material, such person shall be liable to a penalty which shall not be less than Rupees fifty lakhs but which may extend to rupees one crore, as may be determined by the CCI. Describe the procedures if the agency wants to challenge the transaction? The CCI may suo moto conduct an enquiry and issue a show cause notice to the parties to the combination. In the case of voluntary filing by the parties, however, a challenge to the transaction may take two forms: an objection raised by an affected party in response to the Commission s notice the Commission s review of the objections, and the consequent modification it suggests to the transaction Additional comments Once the CCI suggests modifications, the parties may choose to accept them. The parties must then implement these modifications within the time permitted by the CCI. If they fail to do so, the combination is deemed to have an appreciable adverse effect on competition. If the parties do not accept the suggested modifications, they may suggest amendments to the modifications within 30 days. If the CCI accepts these amendments, it must approve the combination. If the CCI does not accept the amendments, the parties have further time of 30 days to accept the modifications suggested by the CCI and implement them within the permitted time. If they fail to do so, the combination is deemed to have an appreciable adverse effect on competition. Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger? If a person contravenes, without any reasonable ground, any order or any condition or restriction imposed as part of an approval by the CCI, he is liable for imprisonment of up to one year in addition to a fine of up to Rupees Ten Lakhs. The CCI also has the power to award compensation to affected parties. Additional Comments The parties are free to implement the merger even pending clearance, unless there is an order (under Section 33 of the Act) restraining them from doing so. However, they run the risk of the merger being found anticompetitive, leading to wasted investment and possible penalties. Describe, briefly, your assessment of the regulatory agency s current attitudes/ activities. 2100 West Loop South, Ste. 1000 Houston, Texas 77027 USA Tel: 1.713.626.9393 www.lexmundi.com

Updated: January 2007 Copyright Lex Mundi Ltd. 2006 The CCI has not yet started to function and no comment is possible at this stage. Chart I The procedure to be followed in an inquiry (either because of notification or otherwise) as prescribed in S. 29 of the Competition Act is shown below. Note that the first three steps are not applicable in the case of voluntary notification. Enquiry by CCI (Based on its knowledge or information submitted by a third party) Show cause notice to the parties to the combination, if CCI is of view that a Combination is likely to cause or has caused Appreciable Adverse Effects on Competition Parties to respond within 30 days of receipt of notice from CCI CCI has 7 days to consider response from the parties If CCI is of the prima facie opinion that combination has or is likely to have appreciable adverse effects on competition, CCI may direct parties to publish details of the combination within 10 working days of its direction CCI may invite any person or member of the public affected or likely to be affected by a combination to file written objections before the CCI within 15 days of the date of publication of the details of such Combination. within 15 days of date of publication. CCI may call for additional information from parties to a combination within 15 days expiry of period of taking objections Parties are required to furnish any additional information within 15 days of CCI s order for such information.. CCI to decide the matter within max. period of 90 working days of receipt of all information. 2100 West Loop South, Ste. 1000 Houston, Texas 77027 USA Tel: 1.713.626.9393 www.lexmundi.com

Updated: January 2007 Copyright Lex Mundi Ltd. 2006 * * * * * The Lex Mundi member in this jurisdiction is Amarchand & Mangaldas & Suresh A. Shroff & Co. Antitrust, Competition and Trade Practice Group Amarchand & Mangaldas & Suresh A. Shroff & Co., India (Contact: Pallavi Shroffpallvani.shroff@amarchand.com) 2100 West Loop South, Ste. 1000 Houston, Texas 77027 USA Tel: 1.713.626.9393 www.lexmundi.com