INDIA Trends and Developments Contributed by: Vaibhav Choukse, Ela Bali, Nripi Jolly and Faiz Siddiqui, JSA
• its turnover in India in the financial year pre - ceding the trigger event is at least 10% of its global turnover. The FAQs clarify that using the internet for distri - bution alone does not make a business a “digi - tal” service. Digital services include e-commerce marketplaces, cloud service providers, and online gaming but not, for example, an insur - ance company selling policies online. If a transaction meets the DVT requirements, it will qualify as a combination and require CCI approval unless any exemption under Compe - tition (Criteria for Exemption of Combinations) Rules, 2024 (the “Exempted Transaction Rules”) can be claimed, notwithstanding that the de minimis exemption is available. Waiver of standstill obligations for open market purchase The standstill obligations for combinations involving open market purchases or acquisition through open offer have been relaxed, provided that they are notified to the CCI within 30 cal - endar days from the consummation of the first acquisition. Post-acquisition, the acquirer can - not influence the target in any manner. However, the acquirer can avail economic benefits (such as dividends, subscription to rights issue, and bonus shares) and vote on matters relating to liquidation or insolvency proceedings. Definition of affiliate modified A company would be considered an “affiliate” of a party if a party has: • 10% or more shareholding or voting rights; • board representation rights (director or observer); or • access to commercially sensitive information (CSI).
The FAQs clarify that CSI encompasses informa - tion vital for a company to protect, maintain or enhance its competitive position in the market. This includes details related to strategic plans, pricing, budgets, board minutes, and business plans. Amendment to definition of control Control is the ability to exercise material influ - ence – either jointly or singly – over the manage - ment, affairs, or strategic commercial decisions of a company or group. The FAQs clarify that holding an observer seat does not, by itself, confer material influence. However, holding one or more (but not a majority of) board seats may indicate significant influence if the directors have the expertise to sway other board members. Further, affirmative voting rights concerning the strategic or operational aspects of the target are deemed to confer control. Exempted Transaction Rules The Exempted Transaction Rules outline 12 cat - egories of transactions that will be exempt from seeking CCI approval, including the following. i) Transactions in the ordinary course of busi - ness (OCB) CCI approval will not be required for the follow - ing transactions in the OCB: • acquisition of not more than 25% of the total shareholding or voting rights of the target by an underwriter or a stockbroker; and • acquisition of not more than 10% of the total shareholding or voting rights of the target by a mutual fund. ii) Acquisition of not more than 25% of total shareholding/voting rights
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