INDIA Trends and Developments Contributed by: Vaibhav Choukse, Ela Bali, Nripi Jolly and Faiz Siddiqui, JSA
Acquisition of shareholding or voting rights of not more than 25% of the target not leading to acquisition of control of the target will qualify as “solely as an investment” (SAI) if: • the acquirer does not acquire the right to: (a) appoint a director or an observer on the target; and (b) access CSI of the target; and • there are no horizontal overlaps, vertical and complementary links (“overlaps”) between the activities of the acquirer group and the target (including their affiliates) in India. In the case of an acquisition of less than 10% shares/voting rights, CCI will not consider the overlaps between parties, and hence, this exemption can be availed, subject to the other two conditions being met. iii) Acquisition of additional shareholding/creep - ing acquisition Additional acquisitions by existing minority shareholders, including their group companies (holding not more than 25% shares/voting rights) will be exempt if the following conditions are sat - isfied: • Condition 1 – post-additional acquisition shareholding will not be more than 25%; • Condition 2 – no acquisition of control of the target; • Condition 3 – the acquirer (or group) should not acquire right to appoint director or observer in the target for the first time; • Condition 4 – the acquirer (or group) must not gain CSI of the target for the first time except when the acquirer (or group) already has a board seat; • Condition 5 – either: (a) there are no overlaps; or
(b) in case of overlaps, the additional acqui - sition does not exceed 5% and the acquirer or its group’s total shareholding in the target does not cross 10%. Holds more than 25% or more but not leading to more than 50% shareholding/voting rights: Acquisition of additional shares or voting rights will be exempt from seeking CCI approval if, provided that the acquisition does not result in change in control of the target: • prior to the acquisition, the acquirer or its group holds more than 25%; and • after the acquisition, the acquirer or its group does not hold more than 50%. Holds more than 50% and acquiring additional shareholding/ voting rights: Acquisition of addi - tional shares or voting rights whereby – prior to the acquisition – the acquirer or its group holds more than 50% will not require CCI approval, provided that the acquisition does not result in change in control of the target. The FAQs clarify that “change in control” encom - passes all situations where there is a change in the quality or degree of control. iv) Intra-group transactions Neither intra-group mergers and amalgamations nor intra-group share/asset acquisitions require CCI approval, provided that there is no change in control of the target. v) Demergers Demergers do not require CCI approval where the resulting company issues shares to the demerged company (or its shareholders) in proportion to their existing shareholding in the
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