MCA

Applicability of threshold exemption limits to combinations. methodology to be adopted for calculating the relevant assets and turnover – MCA

Applicability of threshold exemption limits to combinations. methodology to be adopted for calculating the relevant assets and turnover – MCA 

Ministry of Corporate Affairs issues fresh notifications wherein, the Central Government intends to provide clarity on the applicability of the threshold exemption limits to all forms of combinations; Clarity on the methodology to be adopted for calculating the relevant assets and turnover of the target when only a portion or segment or business of one enterprise is being combined with another

The Ministry of Corporate Affairs (MCA) has undertaken a major reform in the regulation of combinations under the Competition Act, bringing India in line with the global practice.  The Act which was passed by Parliament in 2002 had initially provided for notice of combinations to be given by enterprises, as per Section 5 of the Act, on a voluntary basis. However, this Section was amended in 2007 making the notice mandatory.   

In 2011, in response to concerns expressed by various stake holders, the Government had issued a notification exempting an enterprise, whose control, shares, voting rights or assets are being acquired has either assets of the value of not more than Rs. 250 crores in India or turnover of not more than Rs. 750 crores in India from the applicability of Section 5 of the Competition Act, 2002, for a period of 5 years. These limits were enhanced to Rs. 350 crores and Rs. 1000 crores, respectively, in March, 2016. 

It was, however, noted by the Government that the said notification was being applied to Combinations which resulted only from acquisition but was not extended to Merger/Amalgamation and Acquiring of Control Cases. It was also noted that where only a segment/portion/business of an enterprise was being combined with another enterprise, the relevant assets and turnovers attributable to the target segment/portion/business were not being considered and instead the transferor’s total assets and turnover were being considered for determining the applicability of the exemption. 

            Stakeholders had been voicing their concerns over the issue and in keeping with the Government’s principle of Minimum Government and Maximum Governance, the Ministry has issued  fresh notifications No. S.O. 988 (E) and No. S.O. 989(E) dated 27.03.2017 wherein, the Central Government intends to provide 

(i) Clarity on the applicability of the threshold exemption limits to all forms of combinations as referred under Section 5 of the Act.

(ii) Clarity on the methodology to be adopted for calculating the relevant assets and turnover of the target when only a portion or segment or business of one enterprise is being combined with another. 

With the issue of these notifications, combinations falling within the threshold limits would not require to be filed before the Competition Commission of India. The reform is in pursuance of the Government’s objective of promoting Ease of Doing Business in the country and is expected to make India a more attractive destination for Foreign Direct Investment. The notification is expected to enable greater freedom to industry in taking legitimate business decisions towards further accelerating India’s economic growth. 

Share

Recent Posts

  • Income Tax

A bald statement recorded during survey can not be basis for any addition

A bald statement recorded during survey would not in itself be a foundation for any addition - ITAT In a…

5 hours ago
  • ICAI

ICAI issued Guidelines for responding to Tenders by Chartered Accountants

ICAI issued Guidelines for responding to Tenders by Chartered Accountants The ICAI has issued Tender guidelines to Chartered Accountants for…

6 hours ago
  • ICAI

Empanelment of ICAI Exam observer for January 2027 Examinations. Last date: 20.11.2026

Empanelment to act as ICAI exam observers for January 2027 CA Examination. Last date to apply is 20.11.2026 Empanelment of…

2 days ago
  • GST

No arrest under GST- Major decision of 57th Meeting of GST Council held on 8th October 2026

No arrest under GST- Major decision taken in 57th Meeting of the GST Council on 8th October 2026 PRESS RELEASE…

3 days ago
  • Income Tax

Later SC ruling cannot render an act done in compliance of a court order a statutory default

A subsequent Apex Court ruling on the substantive issue cannot retrospectively make an act done in compliance of a binding…

4 days ago
  • Income Tax

Interest payment on mobilisation advance to NHAI not liable to TDS u/s 194A

Interest payment on mobilisation advance to NHAI not liable for deduction of tax at source u/s 194A - ITAT Interest…

5 days ago