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IBA conference: 'File, smile, fly' CCI to publish M&A draft

IBA Mumbai conference 2010
IBA Mumbai conference 2010

The Competition Commission of India (CCI) draft guidelines on approving M&A deals will be published in the coming days, revealed chairman Dhanendra Kumar yesterday (23 February) at a panel discussion during the two-day International Bar Association (IBA) Mumbai M&A conference.

Kumar said that the long-awaited draft guidelines would be published very soon and that the CCI would invite comments from interested parties.

Kumar added that he wanted the body's principles to be "file, smile and fly", acting as a facilitator to transactions rather than an obstacle, although he added that no competition commission was perfect when it was first launched.

Dhall Law Chambers partner, former CCI chairman and co-panellist Vinod Dhall told Legally India at the sidelines of the event: "What [Kumar] said was generally very encouraging and it sent out the right signals."

Co-panellist and Tata Sons group general counsel Bharat Vasani's expressed concerns that the net could be cast too wide about when a filing needs be made with the CCI to notify a merger.

Vasani said that a worry, which was echoed by others, is that early-stage mergers disclosed to the CCI might find their way into the public domain and affect targets' share prices.

Amarchand Mangaldas partner Pallavi Shroff was also on the panel and argued that the trigger point for CCI notification should be "where there is a binding document that expresses an intention to acquire".

The panel also included Allen & Overy partner Michael Reynolds, Herbert Smith partner Elizabeth McKnight and Mallesons Stephens Jaques partner Dave Poddar.

The Mumbai IBA conference entitled "globalisation of mergers and acquisitions – an Indian perspective" was attended by around 240 delegates from law firms and industry across 23 countries on 22 and 23 February.

Panels also included "public M&A in India: the takeover code", in which Securities and Exchange Board of India (SEBI) executive director Usha Narayanan talked about the future of the takeover code and explained that incremental fine tuning of the takeover code would continue to be made in future.

The panel included Slaughter & May partner Gary Eaborn and Amarchand Mangaldas Mumbai managing partner Cyril Shroff as co-chairs, as well as Merrill Lynch India managing director Raj Balakrishnan, Webber Wentzel partner Christo Els, Hengeler Mueller partner Rainer Krause, Deutsche Bank head of M&A India Amrit Singh and J Sagar Associates (JSA) partner Somasekhar Sundaresan.

The panel contrasted the takeover thresholds in various jurisdictions, such as the UK's and Germany's 30 per cent acquisition threshold that aims to particularly protect minority shareholders, to India's 15 per cent figure, which is a strong safeguard for existing owners and promoters of public companies.

Eaborn said: "The change will have to be evolutionary. If anything stands out it's the change in India but India's economy is still driven by family-run companies and if anything, India wants to encourage those companies to come to the public market.

"Any radical change in the takeover regime which then makes those companies subject to public takeover would deter those companies."

Cyril Shroff and Sundaresan argued that they would prefer a revolutionary rather than an evolutionary approach to adjusting the thresholds. "This is a time as good as any," said Shroff. "The ground reality of the corporate sector has changed and 2010 is vastly different. Companies and promoters control large companies and most are above the 30 per cent mark."

SEBI's Narayanan concluded the panel saying: "We had very wonderful discussions - it'll come in handy for framing the regulations."

Nishith Desai Associates founder Nishith Desai and Luthra & Luthra founder Rajiv Luthra chaired a discussion on "tax strategies for doing M&A in India", which addressed overseas tax structures in light of the Vodafone Hutch case.

The panel also invited comments from two senior tax authority officials present at the talk, although the officials' responses were non-committal.  

The IBA conference was organised locally by Amarchand Mangaldas Mumbai partners Cyril and Vandana Shroff who said they were very pleased with the turnout and the event.

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