Govt likely to modify M&A rules

The central government is likely to notify the merger and acquisition (M&A) rules meant to operationalise M&A provisions prescribed under the Competition Act, 2002 by mid-April.

The M&A rules will lay down the procedures for administering the merger provisions that is to take effect from June 1.

A senior corporate affairs ministry official said the regulations would incorporate most of the changes suggested by stakeholders after Competition Commission of India (CCI) released the draft regulations early this month.

The rules are expected to bring in clarity on the manner in which the government will treat mergers and acquisitions that have taken place before the June 1 deadline, though the completion of the M&A transaction may happen after the cut-off date.

The official said the government was of the view that such transactions should be treated as complete and any residual payments or acquisition of shares that were part of the initial agreement should be cleared within a day's time.

Though the Competition Act was passed eight years ago, CCI was not handed over the powers to scrutinise mergers and acquisitions due to industry reservations.

The notification of the specific M&A provisions of the Act finally came on March 4 with an effective date of June 1.

The draft regulations were posted on CCI website soon after.

Competition experts had pointed out several instances of inconsistencies in the draft law. They had questioned the attempt to broaden the scope of the definition of "board of directors", as it would contradict the laid-down parameters in the Act.

Similarly, experts had pointed out that the draft rule, which calls for publication of the details of merger or acquisition proposals where CCI finds a prima facie case of adverse effects on competition is overstepping the powers provided in the Act which does not talk about 'publication' of details.

The official said all suggestions are being considered before finalising the rules for notification.