The Ministry of Corporate Affairs (MCA), vide gazette notifications dated 16 March 2022, has extended by 5 more years:
- The validity of the target based exemption (De Minimis Exemption) that was due to expire on 28 March 2022 – The MCA vide a gazette notification dated 27 March 2017 had exempted from notification to the Competition Commission of India (CCI), those combinations where the value of the assets being acquired, taken control off or merged, did not exceed INR 350 crores (Rupees three hundred fifty crores) in assets or INR 1,000 crores (Rupees one thousand crores) in turnover. The 2017 exemption was valid for a period of five years. Now through its notification dated 16 March 2022, the MCA has substituted the period of “five years” in the De Minimis Exemption, with “ten years”, thereby extending the exemption benefit for a further period of 5 years, e., till 28 March 2027.
ELP Note: This extension of the De Minimis Exemption will be a welcome step for enterprises that are contemplating M&A activities. As a measure of business continuity, the extension aims to reduce the regulatory burden by exempting combinations involving small targets which are unlikely to raise concerns under the Competition Act, 2002.
- The exemption that allowed enterprises to notify combinations to the CCI beyond the statutorily mandated period of 30 days (of entering into a binding agreement / document or approval from board of directors) has also been extended – The MCA vide its notification dated 16 March 2022 has substituted the words “five years” in the notification dated 29 June 2017, with “ten years”, thereby extending the exemption for a further period of 5 years from previously 28 June 2022 to 28 June 2027.
ELP Note: This extension, also in the nature of a continuity measure, recognizes the commercial realities that parties who require a mandatory approval from CCI for their transactions will, in any event, act in a prudent, compliant and time bound manner.