INDIA Law and Practice Contributed by: Anuja Tiwari, Mallika Anand, Pranjal Bhattacharya and Antra Shourya, AZB & Partners
• issue a prima facie opinion if, on the basis of its analysis, the CCI believes that the transaction is likely to cause an appreciable adverse effect on competition (AAEC) in the specific industry; or • approve the transaction if there is no AAEC. However, if the CCI does not pass an order within a period of 210 days, the combination is deemed to be approved. The Competition Act provides for the de minimis exemption, which exempts transactions from notifica- tion to the CCI if the target assets/company/business/ division being acquired has either: • assets valued at less than INR4.5 billion in India; or • turnover not exceeding INR12.5 billion in India. The Competition (Amendment) Act 2023 has intro- duced an additional test determining the DVT for notification to the CCI. A transaction must be notified to the CCI if: • the value of the transaction exceeds INR20 billion; and • the target has substantial business operations in India. 5.6 Labour Law Regulations The key labour legislations and aspects that should be considered during an M&A transaction in India are: • compliance with employee benefit legislation, including contributions towards funds and insur- ances; and • disputes regarding employees, workers and con- tractors, trade unions, etc. Although there is no formal works council system as is prevalent in European countries, companies typically have mechanisms for personnel represen- tation through trade unions. Such consultations with employees and unions are not legally binding; how- ever, if the target’s personnel are represented by a trade union, labour consultation may be required and forms the basis of the collective bargaining agree- ments entered into between the target company and such trade union. There is no mandatory requirement
to disclose information about union representation or collective bargaining agreements either to the board or to the shareholders. 5.7 Currency Control/Central Bank Approval Currency control is primarily regulated by the RBI and governed by the Foreign Exchange Management Act 1999 (FEMA). A prior approval may be required from the RBI for a transaction involving FDI through the government approval route if the combination involves the transfer of shares or interest in an Indian company by a person resident outside India or by an overseas citizen of India or by an erstwhile overseas corpo- rate body. As per the Companies (Compromises, Arrangements and Amalgamations) Rules 2016 (the “CAA Rules”), in cases of merger or amalgamation of a transferor foreign company incorporated outside India (being a holding company) and the transferee Indian company (being a wholly owned subsidiary company incorporated in India), a prior approval from the RBI must be obtained by both companies. In order to regulate receipt and payment in foreign exchange transactions, the RBI has also issued the Foreign Exchange Management (Manner of Receipt and Payment) Regulations 2023, which provides that no Indian resident is permitted to make or receive pay- ments from a non-resident, unless permitted under the foreign exchange laws or approved by the RBI. These regulations also bifurcate the transactions into trade transactions and transactions other than trade transactions. In the case of trade transactions, receipt and payment for any export or import have been pro- vided for countries such as Nepal and Bhutan, as well as Asian Clearing Union member countries. Fur- ther, payments and receipts for any current account transaction (apart from trade transactions) may only be made in Indian rupees between an Indian resident and a foreign resident visiting India. 6. Recent Legal Developments 6.1 Significant Court Decisions or Legal Developments The following are some of the most significant legal developments in past three years with regard to ener- gy and infrastructure M&A.
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