Provisions involved in Fast Track Route of Merger Or Amalgamation
– Section 233 of the Companies Act, 2013
– Rule 25 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
Applicability: Merger/Amalgamation under this section can be entered only between the following Companies:
1. Two or more small companies
2. Holding and its wholly-owned subsidiary
3. Two or more start-up companies
4. One or more start-up company with one or more small company.
It is not mandatory for the above companies to go through this route only. It is optional as it is a simplified, cost efficient and less time-consuming procedure.
Important Terms:
Transferor Company – A company that is amalgamated into the other company.
Transferee Company – A company into which the transferor company is amalgamated.
Appointed Date – The date with effect from which this scheme shall come into effect or such other date as may be fixed or approved by the Regional Director or competent authority.
Various Forms:
- Form No. CAA.9: Notice of the scheme inviting objections or suggestions
- Form No. CAA.10: Declaration of solvency
- Form CAA.2 : Notice to be given to Members/Creditors
- Form No. CAA.11: Notice of Approval of the Scheme of Merger/Amalgamation
- Form No. CAA.12: Confirmation Order
- Form No. INC-28: Filing of order with Registrar of Companies
Procedure:
1. Check if the Memorandum of Association and Articles of Association contains the clause of Merger/Amalgamation.
2. Convening of a Board Meeting of every company to pass the following resolutions-
- To approve the draft scheme of merger/amalgamation
- To approve the Form CAA-10 along with the Auditor Report
- To appoint and authorise a professional to represent the company before the Regional Director/respective State Government, statutory body/Authority/Registrar of Companies
- To authorise any one of the directors to sign, file, submit the documents and to do any such act/deed to give effect to the Merger.
3. Each company shall file Form GNL-1 with the Registrar of Companies and shall also submit the following documents with the Official Liquidator and other concerned authorities by way of a registered post with acknowledgement due:
- Draft Scheme of Merger/Amalgamation
- Form CAA-9
- Form CAA-10
- Board Resolution
- List of Shareholders
- List of Creditors along with the Auditor’s Certificate confirming the said list
- List of Directors
4. Pursuant to Section 117 of the Companies Act, 2013 the company shall file Form MGT-14 with the Registrar for the resolutions passed in the meeting of Board of Directors. (It is exempted for private companies)
5. If no suggestions/objections or comments are received by the company within a period of 30 days from the Registrar of Companies and Official Liquidator, then the company shall proceed with giving a notice (Form CAA-2) of atleast 21 days to convene general meeting of members/creditors.
6. Convene General Meeting of the members of the Company. The scheme in the meeting shall be approved by the members holding atleast 90% of the total number of shares.
7. Convene General Meeting of the creditors of the company by giving a notice of 21 days. The scheme shall be approved by at least 9/10th value of creditors. Meeting of creditors is not required, if the written consent is given by the majority of creditors holding atleast 9/10th in value.
8. Form MGT-14 has to be filed for the resolution passed at the meeting of members within 30 days of the date of passing the resolution.
9. The transferee company shall file a copy of the scheme so approved along with Form CAA-11 within seven days from the conclusion of the meetings with the Regional Director (Form RD-1), Registrar of Companies (Form GNL-1), Official Liquidator and other concerned authorities through a registered post with acknowledgement due.
10. The Regional Director, Registrar of Companies, Official Liquidator will share their concerns in the form of a questionnaire to the transferee company and transferor company.
11. The Transferee company and Transferor Company shall provide the information/documents/clarification as mentioned in the questionnaire within the prescribed time period.
12. The Registrar of Companies and Official Liquidator will submit their objections or suggestions to the Regional Director within a period of 30 days
13. Upon receipt of no objections or suggestions from the Registrar of Companies and Official Liquidator, the Regional Director will issue a confirmation order of the scheme and the same shall be filed within 30 days from the date of order in Form INC-28 with the Registrar of Companies.
*Please note if no such communication is made to the Regional Director, it shall be presumed that it has no objection to the scheme.
14. In case any objection or suggestion is received from Registrar of Companies or Official Liquidator or if Regional Director is of the opinion that the scheme is not in public interest, the Regional Director may request the respective authorities to consider the scheme under Section 232 in Form CAA.13 within 60 days of it receiving the scheme.
Author: Khushi Bansal
Disclaimer: The views, information or opinions expressed herein are compiled by the Legal team of M&K Associates, Company Secretaries, Hyderabad. The above information is solely for disseminating knowledge and private circulation. We are hereby not liable for any loss, damage or inconvenience caused as a result of reliance on such information and we accept no legal liability or other responsibility by or on behalf of any errors, omissions, or statements on this content.
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