On September 09, 2024, MCA vide Notification G.S.R 549(E) notified the Competition (Criteria for Exemption of Combination) Rules, 2024.

The Rules deal with the categories of combinations that fulfill the criteria mentioned in the Schedule to the Rules shall be exempted from the requirement to comply with sub-sections (2), (2A), and (4) of section 6 of the Competition Act. The above Rules shall come into force with effect from September 10, 2024.

The exemptions include:

1. acquisitions of shares in the ordinary course of business, such as those by underwriters, stockbrokers, and mutual funds, provided they do not exceed certain thresholds of shareholding or voting rights, typically capped at 25% for most cases and 10% for mutual funds.
2. Acquisitions solely for investment purposes that do not lead to control over the enterprise, and internal mergers or acquisitions within the same group that do not alter control are also covered.
3. Acquisitions of additional shares or voting rights of an enterprise by the acquirer or its group entities, where the acquirer or its group entities, before acquisition, holds shares or voting rights of the enterprise, but does not hold more than 25% of the shares or voting rights of the enterprise, either before or after such acquisition and which does not lead to control over the target enterprise, does not grant board representation, does not provide access to sensitive information, and does not involve competitive activities. In cases where related activities are engaged, the acquisition must be limited to 10% of shares or voting rights.
4. Acquisitions increasing shareholdings to 25% or less, or from 25% to 50%, are exempt provided there is no change in control or new board representation. Acquisitions where the acquirer already holds over 50% of shares are also exempt, as long as there is no change in control.
5. Certain asset acquisitions in the ordinary course of business which include stock-in-trade, raw materials, or similar assets that do not constitute a business.
6. An acquisition of assets, not directly related to the business activity of the party acquiring the asset or made solely as an investment, not leading to control of the enterprise whose assets are being acquired except where the assets being acquired represent substantial business operations in a particular location or for a particular product or service of the enterprise, of which assets are being acquired, irrespective of whether such assets are organized as a separate legal entity or not
7. Acquisitions resulting from bonus issues, stock splits, or rights issues that do not lead to changes in control.
8. Asset transfers and mergers within the same group are exempt as long as control remains unchanged.
9. Acquisition of shares, control, voting rights, or assets by a purchaser approved by the Competition Commission of India.
10. Demerger of a company and issue of shares by resulting company, in consideration of demerger, either to the demerged company or to the shareholders of the demerged company in the proportion of their shareholding in the demerged company before the demerger, except for discharge of consideration for fractional shares.

The acquirer and its group entities mean the ultimate controlling person of the acquirer and other entities forming part of the same group.

An entity is considered to be an affiliate of another enterprise if that other enterprise has:

• 10% or more of the shareholding or voting rights of the enterprise; or
• right or ability to have a representation on the board of directors of the enterprise either as a director or as an observer; or
• right or ability to access commercially sensitive information of the enterprise.

The detailed criteria for these exemptions are outlined in the appended schedule, specifying conditions under which combinations can benefit from these exemptions.

The link to the aforesaid Notification is as follows:
https://www.cci.gov.in/combination/legal-framwork/notifications/details/23/0