India Fines Singapore’s Temasek Holdings

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Aug. 23 – Temasek Holdings, the investment arm of the Singapore government, received a fine of Rs 50 lakh (US$79,000) this month from the Competition Commission of India (CCI) for late filing of M&A approval forms required under Indian securities law. This is the first time a government-owned international investment company has been issued a fine by the CCI, a sign the regulatory body may be intensifying its scrutiny of international transactions.

The CCI was established in 2003 to enforce India’s Competition Act, which outlines the country’s anti-competition rules and restricts any activities that might have an adverse effect on Indian businesses. Under CCI regulations, any investment firm planning to buy a controlling share of an Indian company must notify the commission 30 days in advance and submit the necessary filings with details about the proposed M&A deal.

Temasek violated the Competition Act regulations after failing to file with the CCI within 30 days following their bid to buy a significant stake in DBS Group.

After receiving Temasek’s share purchase agreement nearly 400 days past the CCI deadline, the commission determined it was appropriate to levy the US$79,00 fine against the Singaporean investment company.

“Given the circumstances, Temasek is naturally disappointed with the decision, but respects the Commission’s decision under Indian law. Temasek will study the decision, and will take the necessary actions to follow up as needed,” commented Temasek’s Managing Director Stephen Forshaw.

When a violation occurs, CCI has the authority to levy fines of up to one percent of the total combined assets of all companies involved in the M&A deal. In Temasek’s case, the maximum potential fine was well in excess of the penalty charged by the CCI.

Temasek is large investment company with nearly US$173 billion under management and routinely makes equity investments in Indian companies, with holdings in companies such as Tata Teleservices and Bharti Airtel. The fund has an AAA credit rating from Standard & Poor’s, one of only a few global investment companies to achieve the top credit score, and also sits atop the Linaburg-Maduell Index, which measures the transparency of government-owned investment funds.

Temasek has since withdrawn its bid for DBS Group, but is still responsible for settling its fine with the CCI.

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