MCA revises thresholds for mergers and amalgamation under Competition Act
PrintListen to this Article
0:00
0:00
In a relief to India Inc, the Ministry of Corporate Affairs (MCA) has raised the threshold limit for mergers and amalgamations (M&As) that need approval of the Competition Commission of India (CCI).
In its latest notification, the MCA has enhanced the threshold value by 150 per cent on the basis of the wholesale price index (WPI) and exchange rate of the rupee.
In another notification, the MCA has said that if the acquisition target has an asset value of less than Rs 450 crore or turnover of less than Rs 1,250 crore, then such a combination deal would be exempt from CCI approval as well.
This relief is valid for two years from the date of publication in the official gazette.
“The central government, acting in public interest, provides exemptions to enterprises engaged in specific activities under the Competition Act. These include acquisitions according to clause (a) of Section 5, the acquisition of control by an individual over an enterprise as per clause (b) of Section 5, and mergers or amalgamations under clause (c) of Section 5,” Sunayana Basu Mallik, partner, King Stubb & Kasiva, said.
According to Section 5 of the Competition Act, acquisition of one or more enterprises or merger or amalgamation of enterprises, which exceeds the threshold prescribed therein, shall be a 'Combination' for the purposes of the Act.
In scenarios where a portion of an enterprise, division, or business is undergoing acquisition, taking control, merging, or amalgamating with another enterprise, the determination of relevant assets and turnover for calculating thresholds under Section 5 of the Act depends on the value of the said portion or division or business.
“This value is determined by considering the book value from audited books of accounts or the statutory auditor's report if the financial statement is pending. It encompasses brand value, goodwill, or the value of various commercial rights, and the turnover is certified by the statutory auditor based on the last available audited accounts of the company,” Mallik added.
In its latest notification, the MCA has enhanced the threshold value by 150 per cent on the basis of the wholesale price index (WPI) and exchange rate of the rupee.
In another notification, the MCA has said that if the acquisition target has an asset value of less than Rs 450 crore or turnover of less than Rs 1,250 crore, then such a combination deal would be exempt from CCI approval as well.
This relief is valid for two years from the date of publication in the official gazette.
“The central government, acting in public interest, provides exemptions to enterprises engaged in specific activities under the Competition Act. These include acquisitions according to clause (a) of Section 5, the acquisition of control by an individual over an enterprise as per clause (b) of Section 5, and mergers or amalgamations under clause (c) of Section 5,” Sunayana Basu Mallik, partner, King Stubb & Kasiva, said.
According to Section 5 of the Competition Act, acquisition of one or more enterprises or merger or amalgamation of enterprises, which exceeds the threshold prescribed therein, shall be a 'Combination' for the purposes of the Act.
In scenarios where a portion of an enterprise, division, or business is undergoing acquisition, taking control, merging, or amalgamating with another enterprise, the determination of relevant assets and turnover for calculating thresholds under Section 5 of the Act depends on the value of the said portion or division or business.
“This value is determined by considering the book value from audited books of accounts or the statutory auditor's report if the financial statement is pending. It encompasses brand value, goodwill, or the value of various commercial rights, and the turnover is certified by the statutory auditor based on the last available audited accounts of the company,” Mallik added.
Category : MCA | Comments : 0 | Hits : 381
The Ministry of Corporate Affairs (MCA) will soon open its Central Processing Centre (CPC) for processing of forms related to all compliances for companies. This is aimed to free up capacity ...
The ministry of corporate affairs in India has granted 1,270 requests from professional associations - including company secretaries and chartered accountants - to deactivate or merge duplicated user ...
The Ministry of Corporate Affairs has already struck off hundreds of thousands of shell companies that are often used to funnel black money, the report said quoting sources in the know The Ministry...
Comments