Centre Grants Press Note 3 Clearance for ANTA Sports’ Indirect Stake Purchase in Puma India

Chinese sportswear giant ANTA Sports Products Limited secured regulatory clearance from the Government of India under the Press Note 3 (2020 Series) framework. The approval pertains to ANTA's proposed acquisition of a 29.06% equity interest in Germany-based athletic apparel manufacturer PUMA SE.

Because PUMA SE maintains an operating subsidiary in India—Puma Sports India Private Limited—the transaction results in ANTA indirectly acquiring a 29.06% beneficial interest in the Indian entity. Khaitan & Co represented and advised ANTA Sports in navigating the mandatory government approval process required for inbound investment linked to land-bordering jurisdictions.

Legal Topic

Area of Law: Foreign Direct Investment / Corporate Regulatory Compliance

Sub-topic: Cross-Border M&A / National Security Screening (Press Note 3 Clearance)

Core Legal Issue

The transaction centered on whether an offshore acquisition of shares in an overseas parent company triggers mandatory Indian government scrutiny when the target firm operates an active subsidiary within India.

Under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, any foreign direct investment originating from, or where the ultimate beneficial owner resides in or is a citizen of, a country sharing a land border with India cannot proceed under the automatic route. The core legal test required determining whether the acquisition of a minority, non-controlling 29.06% holding in an offshore holding structure constituted indirect foreign investment subject to prior inter-ministerial vetting.

What Did the Authority Decide?

The competent authority within the Government of India granted formal regulatory approval under the Press Note 3 framework.

The clearance permits ANTA Sports to proceed with its offshore share acquisition in PUMA SE without violating Indian exchange control regulations regarding Puma Sports India Private Limited. No adverse orders or public restrictions were imposed, and the transaction is cleared to advance through its global closing milestones subject to standard statutory compliance and reporting.

Key Legal Points

• Extraterritorial Reach of PN3: Indian foreign investment regulations apply to offshore multi-jurisdictional mergers and acquisitions whenever an Indian operating entity sits within the underlying corporate chain.

• Beneficial Ownership Trigger: The regulatory scrutiny applies irrespective of whether the offshore share purchase is direct or indirect, capturing upstream share transfers involving entities with links to countries sharing land borders with India.

• Absence of a De Minimis Threshold: The PN3 regime does not provide a safe-harbor percentage exemption for indirect non-controlling interests; an indirect acquisition of a 29.06% stake mandates prior administrative clearance just as a majority buyout would.

• Inter-Ministerial Scrutiny: Approvals under this framework undergo coordinated scrutiny involving the Ministry of Commerce and Industry, the Ministry of Home Affairs, and relevant administrative line ministries before formal clearance is issued.

Relevant Law

• FDI Policy (Press Note 3, 2020 Series): Issued by the Department for Promotion of Industry and Internal Trade (DPIIT), mandating prior government approval for investments from border-sharing nations.

• FEMA (Non-debt Instruments) Rules, 2019: Specifically Rule 6 and the proviso inserted via the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2020.

• Foreign Exchange Management Act, 1999 (FEMA): Governing inbound capital flows and compliance obligations for Indian corporate subsidiaries.

Arguments of the Parties

Acquiring Entity (ANTA Sports Products Limited): The applicant maintained that the proposed transaction is primarily an international market acquisition targeting a European publicly listed firm (PUMA SE). Counsel submitted that compliance with Indian law was fully observed by seeking advance government approval under the Non-debt Instruments Rules, ensuring full disclosure of beneficial ownership structures without attempting to circumvent Indian foreign exchange controls.

Regulatory Authority (Government of India / Scrutiny Committees): The vetting authorities assessed the national security and sectoral implications of the indirect equity acquisition. Upon reviewing the shareholding pattern, ultimate beneficial ownership disclosures, and the commercial retail activities of Puma Sports India, the government concluded that the transaction met current policy parameters, allowing clearance without imposing structural objections.

Why Does It Matter?

Since the introduction of Press Note 3 in April 2020, Chinese-linked investments and cross-border acquisitions touching Indian entities have faced lengthy processing timelines and high levels of regulatory caution.

This clearance demonstrates that indirect acquisitions involving global brands with significant Indian commercial footprints remain viable under the government route when parties proactively submit comprehensive beneficial ownership disclosures. It provides a practical precedent for international M&A practitioners structuring multi-tier cross-border deals: even minority, indirect acquisitions of Indian subsidiaries by entities rooted in border-sharing countries must build sufficient lead time for Indian regulatory approvals into their global closing conditions.

Legal Takeaway

Any global corporate transaction that results in an entity or individual from a country sharing a land border with India acquiring an indirect stake in an Indian company—regardless of percentage size or control—mandates advance approval from the Indian government under Press Note 3. Dealmakers must account for these extraterritorial FDI thresholds in cross-border transaction timelines and closing covenants.

Sources

Primary Source: Government of India, Department for Promotion of Industry and Internal Trade (DPIIT) — Press Note No. 3 (2020 Series) read with Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020.

Additional Sources: Official transaction disclosures and regulatory filings by Khaitan & Co and ANTA Sports Products Limited.