Amendment to Combination Regulations

The Competition Commission of India, on 23rd February 2012, has amended the Combination Regulations with a view to provide relief to the corporate entities from making filings for combinations which are unlikely to raise adverse competition concerns, reduce their compliance requirements, make filings simpler and to move towards certainty in the application of the Act and the Regulations.

Following are some of the major changes in the Combination Regulations:

1. To reduce the compliance burden to the companies that are looking for intra-group restructuring, the Regulations have now dispensed with the requirement of filing a notice in respect of intra-group mergers or amalgamations involving enterprises wholly owned by the group companies.

2. Acquisitions of shares or voting rights pursuant to buy backs and acquisition of shares or voting rights pursuant to subscription of rights issue (without the restriction of their ‘entitled proportion’), not leading to acquisition of control, are now included in the list of transactions in Schedule I, that normally would not require a filing with the Commission.

3. The Company Secretary of the company, duly authorised by the Board, has been authorised to sign the Form I or Form II, in addition to those persons specified under the general regulations (i.e. the Managing Director or the Director authorized by the Board).

4. Form I remains the default form, wherein some simplifications have been introduced.

5. In Form I, the distinction for filling up Part I for certain types of transactions and Part II for the remaining transactions has been removed, leading to clarity and uniformity.

6. Form I has been amended and a provision has been introduced for parties to provide details of value of the assets and turnovers for the purpose of Section 5 and to provide a copy of the agreement, board resolution etc. as mentioned in Section 6(2).

7. Parties retain the option of filing Form II, especially in those cases where there may be significant horizontal overlap (>15%) and/or significant vertical relationship (>25%) between the parties.

8. In order to provide certainty about transactions involving asset transfers and calculation of value of assets and turnover for the purposes of Section 5 of the Act, a new provision has been introduced for attribution of value of assets and turnover of a transferor company to the transferee company where assets are transferred to the transferee company for the purpose of effecting a combination.

9. A provision has been made for admission of belated filing of Form III in respect of transactions covered under Section 6(5). Further, Form III would now be filed along with a copy of the loan or investment agreement.

10. The Fee has been increased from INR 50,000 to INR 10,00,000 in respect of Form I and from INR 10,00,000 to INR 40,00,000 in respect of Form II.