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ABC Ltd. agrees to acquire XYZ Ltd. subject to Competition Commission of India (CCI) clearance, which is substantive. Parties have mutually agreed terms and price. Acquisition date is:
AThe date the contract is signed, irrespective of CCI clearance
BThe earlier of contract date and clearance date
CThe date CCI clearance is received (because substantive regulatory approval is a condition precedent to control passing)
DThe date the parties mutually agree on the terms
Answer & Solution
Correct answer: C. The date CCI clearance is received (because substantive regulatory approval is a condition precedent to control passing)
A substantive regulatory clearance gates control; until it is granted, the acquirer cannot direct the relevant activities. Therefore acquisition date cannot precede CCI clearance.
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