MCA PROPOSES EXEMPTION FOR SELECT M&A DEALS FROM

FILING COMBINATION NOTICES

The Ministry of Corporate Affairs (MCA) has set forth a groundbreaking proposal aiming to
exempt certain mergers and acquisitions from the mandatory notice filing to the Competition
Commission of India (CCI). This development marks a significant stride in facilitating
smoother business transactions while ensuring regulatory compliance.

Understanding the Proposal:

The MCA has introduced the draft CCI (Exempted Combination) Rules, 2024, which outline
scenarios where specific M&A activities would be exempt from complying with certain
sections of the Competition Act, 2002. Despite meeting the prescribed thresholds under Section
5 of the Act, acquisitions made in the regular course of business may be exempted from filing
requirements. Additionally, mergers or amalgamations within the same group could also
qualify for exemption provided there's no change in control.

Current Regulatory Landscape:

Presently, the regulatory framework provides guidance on combinations that are less likely to
impact competition adversely. The 2011 Combination Regulations specify categories of
combinations listed under Schedule I, which are ordinarily not likely to cause an appreciable
adverse effect on competition in the country. However, absolute exemption is not granted, and
transactions are evaluated on a case-by-case basis.

Proposed Changes:

The MCA's proposed de-minimis thresholds and criteria for the green channel, as outlined in
the draft CCI (De-Minimis) Rules, 2024, and the draft CCI (Green Channel) Rules, 2024, aim
to streamline regulatory processes. These initiatives seek to foster a business-friendly
environment while ensuring effective competition regulation. By introducing clearer guidelines
and exemptions, the MCA endeavors to reduce the regulatory burden on businesses and
enhance the ease of doing business in India.

Call for Public Comments:

Stakeholders and the public are invited to provide feedback on the draft rules until April 10,
2024. This inclusive approach emphasizes transparency and collective participation in shaping
regulatory frameworks. The MCA recognizes the importance of engaging stakeholders in the
decision-making process to ensure that regulatory reforms align with the needs and aspirations
of businesses and the wider community.

Implications and Outlook:

The proposed exemptions signify a proactive approach by the MCA to strike a balance between
promoting ease of doing business and safeguarding competition. If implemented, these changes
could streamline M&A processes, reduce regulatory burden, and foster a more conducive
environment for business expansion. By providing clarity and certainty to businesses, the MCA
aims to encourage investment, innovation, and economic growth.

What's Next:

As the MCA evaluates public feedback and finalizes the rules, stakeholders should stay
informed and actively participate in the consultation process. The proposed exemptions hold
promise for businesses seeking to navigate M&A activities with greater agility and efficiency.
By contributing to constructive dialogue and shaping regulatory reforms, stakeholders can play
a crucial role in driving sustainable growth and competitiveness in the corporate landscape of
India.