INDIA Law and Practice Contributed by: Anand Lakra, Shivpriya Nanda, Zain Pandit and Ami Shah, JSA Advocates & Solicitors
DVT A proposed transaction which is not notifiable to the CCI based on the Financial Thresholds would require notification to and approval from the CCI if: (i) the value of the proposed transac - tion exceeds INR2,000 crores (USD237.59 mil - lion); and (ii) the target has “substantial business operations in India” (SBOI). The CCI has also prescribed the methodology for assessing the value of the transaction and scope of SBOI. De Minimis Exemption A proposed transaction will not require notifi - cation to and approval from the CCI if the tar - get has either a consolidated asset value not exceeding INR450 crores (USD53.46 million) in India or a turnover not exceeding INR1,250 crores (USD148.49 million) in India (referred to as the “De Minimis Exemption” ). The De Minimis Exemption will not be applicable if the DVT is breached. Exemption Under the Competition Act The Competition Act and the rules framed there - under also provide exemptions from notification to the CCI if the transaction is pursuant to any covenant of a loan/investment agreement by a public financial institution, SEBI-registered for - eign portfolio investor, bank or SEBI-registered Category I alternative investment fund, or if the acquisition is of not more than 25% of shares or voting rights and qualifies as “solely as an invest- ment” . Additionally, certain creeping acquisitions and acquisitions of assets, inter-alia relating to the acquisition of current assets which do not constitute the business of the target, are also exempted. Acquisitions pursuant to corporate actions which are applicable to all shareholders, such as rights issue, bonus issue, stock split, are also exempt provided that such acquisitions do not result in a change in control of the target. Lastly, intra-group transactions (not resulting in
mitted to hold up to a certain percentage of the Indian entities’ equity capital. Pricing Guidelines Foreign investment in India is also subject to pricing guidelines which mandate that a foreign investor must pay a price that is higher than the fair value of the target. Foreign Investment from Neighbouring Countries Foreign investment from entities or beneficial owners of such foreign investment that are situ - ated or citizens of a country that shares a land border with India would require prior approval of the government as a pre-condition to the invest - ment. The said rule also restricts transfer of own - ership of any existing investment in India to such In India, business combinations are primarily governed by the Competition Act and the rel - evant regulations framed thereunder. “Combination” for the purposes of the Competi - tion Act means the acquisition of control, shares, voting rights or assets, or merger or amalgama - tion exceeding the “financial thresholds” , based on the asset value and turnover of the parties/ group ( “Financial Thresholds” ) or the deal val- ue thresholds (DVT) (based on the value of the transaction). entities or beneficial owners. 2.4 Antitrust Regulations If any of the tests prescribed under the Financial Thresholds or the DVT are met, the proposed transaction will qualify as “Combination” and require the approval of the CCI, unless the noti - fying party can take advantage of any of the exemptions provided in the Competition Act or the rules framed thereunder ( “Exemptions” ).
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