While the Scheme of Merger is drafted, the document contains two definitions/ provisions called Appointment Date and Effective Date. The Companies Act, 2013 under section 232(6) defines appointment date and under that, it states very ambiguously yet clearly that The Scheme shall be effective as of the specified date and in no event later than the set date, and it may not be regarded to be in effect as of any date subsequent to the appointed date. Appointment Date means a date as may be determined by the Board of Directors of the concerned Companies or directed by the High Court and is the date with effect from which the Scheme shall upon sanction of the same by the High Court, be deemed to be operative. The Acquisition is said to be complete when all the documentation has been completed and submitted to the Registrar of the Companies along with the order of the court. This is the appointment date.
In 2019, The Ministry of Corporate Affairs sent out a notification through General Circular No. 09/2019 which gave a little more clarity on how to approach the concept of appointment date. The notification elaborated the definition provided in the Act and stated that the appointment date does not have to be a calendar date and that it can be an ‘Event based Date’.
In case, the companies that are forming the merger deal, agree to a specific calendar date, in that case that date shall be the appointment date, even if the process of order filing with the registrar of companies is delayed(Not more than a year). And in case the deal specifies a particular event, which is usually the day when the order of the court is filed with the registrar if the companies, then in that case, that shall be the appointment date.
For the provisions of law, the appointment date is essentially the same as the effective date.
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