Centre eases M&A filing norms
The Ministry of Corporate Affairs, in a notification, erased the requirement to apprise the Competition Commission of India (CCI) within 30 days of the signing of a merger and acquisition deal. However, a deal can't be implemented without the CCI's clearance. So, competition lawyers say the rule change would end the practice of sending 'half-baked filings' to avoid heavy penalties. VEENA MANI writes
In a recent notification, the Ministry of Corporate Affairs erased the requirement to apprise the Competition Commission of India (CCI) within 30 days of the signing of a deal for a merger and acquisition (M&A).
However, an M&A deal can’t be implemented without CCI clearance. So, competition lawyers say the rule change would end the practice of sending ‘half-baked filings’ to avoid heavy penalties. Earlier, they say, in the rush to comply with the deadline, these filings would contain little substantive information.
The penalty used to be one per cent of annual turnover or the relevant assets for delayed filings.
Hence, the experts believe the change would result in companies trying to send all the requisite documents at one go to the CCI, which could result in wrapping up of M&A cases within stipulated 210 days.
Till now, the CCI would approach companies every now and then after getting their M&A filings for clarifications. When a clarification is sought, the 210-day period Corporate affairs ministry abolishes 30-day compulsory intimation of M&As Lawyers suggest this amendment is in line with global practices Lawyers suggest overseas firms to benefit; they can align their filings in India with global filings Amendment to stop half-baked filings was usually exceeded. Competition lawyers expect the CCI to hold consultations with stakeholders, so that parties would be aware of what exactly has to be sent for the competition watchdog to probe in such deals.
A competition lawyer with a leading law firm opines, “This will give companies time to assess the market and ascertain what all information on the deal needs to be produced to the CCI.” He narrated a recent deal where only part of the needed information was furnished to the CCI, to avoid being penalised.