The merger and acquisition (M&A) norms being finalised by the Competition Commission of India (CCI) would not affect any corporate M&A in the public domain. This would be true even for deals that are not technically closed by June 1 — when the new M&A norms become effective.
The CCI and the ministry of corporate affairs have decided to consider all M&A proposals that have been officially announced till June 1 as complete and would not subject them to scrutiny under the Competition Act, according to an official.
Currently, the CCI is weighing four- five formulae proposed by various stakeholders and would choose the best way to ascertain the merits of various M&As that may claim to have been closed before the June 1 deadline.
Any deal, which is in the public domain through official announcements like mandatory filings before the Securities and Exchange Board of India or a legal filing in a court of law, may thus, be treated as complete if it happens before the cut-off date.
The corporate affairs ministry had, in March, notified that the sections dealing with M&As under the Companies Act shall come into effect on June 1 and all M&As that are not complete by then would come under the scrutiny od the CCI. However, this led to a lack of clarity among corporate stakeholders, since there was no proper definition of a ‘complete’ deal was.
CCI officials clarified all M&A deals, in which effective steps had been taken by the corporate entities involved in the exercise before June 1, should be treated as ‘complete’.
The CCI would take a final decision on the various proposals in its meeting scheduled on April 29.
The commission and the ministry have also scheduled industry interactions on the topic in Mumbai, Hyderabad and Bengaluru in the coming days.
According to an estimate by global consultancy firm Grant Thornton, the total value of private equity, merger and acquisition and qualified institutional placement deals involving India Inc stood at $20.56 billion during the January-March period, 2011 . There were 221 such deals during the three month period, the agency said in its report.
The ministry had, in March, exempted all M&As of a value less than Rs 250 crore or involving companies with less than Rs 750 crore, from the provisions of the Competition Act for a period of five years.