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Deora bats for industry; hints at softening of Mergers and Acquisitions norms
April, 15th 2011

Indicating softening of Mergers and Acquisitions (M&A) regulations, the Corporate Affairs Minister, Mr Murli Deora, has said that industry would be heard first before the Competition Commission finalises the regulatory provisions in the new competition regime.

We will be holding consultations with the industry in Mumbai, Bangalore, Hyderabad etc, to get their feedback on the merger regulations. We dont want industry to say that they have not been allowed to give their views. If someone has a better alternative, we will change, he said.

His statement comes ahead of his scheduled meeting with industry representatives and other stakeholders on April 25 in Mumbai.

It is to be noted that the Competition Commission of India (CCI) is already working with corporate law experts to draw a more acceptable M&A regulation. Late last week, the MCA Secretary, Mr D.K. Mittal, and the CCI Chairman, Mr Dhanendra Kumar, had met industry representatives and competition law experts to get their feedback on the draft merger regulations.

The Minister further ensured the industry that the new competition regime will not disrupt the activities of Corporate India.

Coming June 1, all large companies would require to seek the Competition Commission of Indias (CCIs) 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.

The issues concerning the impact of merger of MNCs over their Indian subsidiaries was also raised by industry, which wanted that such mergers should be kept out of the purview of the norms. Another matter was concerning issuance of bonus shares and transfer of equity in the case of mergers.

According to 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, CCI would take a prima facie view on the proposed combinations within a month of filing by companies, addressing a major concern of 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.

Besides, only those proposals would need the CCIs 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 companys net assets have to be a minimum of Rs 200 crore or it should have a turnover of Rs 600 crore for CCI intervention.

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