‘Mergers generate substantial synergies’ Roger Altman
CONCEPT OF FAST TRACK MERGER
Fast Track Merger is a streamlined process of merger that has simplified the process of merger in comparison with traditional merger procedure.
The procedure of Merger and Amalgamation has become an easy step after introduction of the scheme of ‘FAST TRACK MERGER’.
Earlier under Section 230 to 232 of the Companies Act 1956 the procedure of merger was lengthy and time taking as there was a mandatory Court intervention but under section 233 of the Companies Act 2013, with the concept of Fast Track Merger, the procedure has been simplified as well as time bound.
ADVANTAGES OF FAST TRACK MERGER
COMPANIES TO WHOM SCHEME IS APPLICABLE
As per Section 233 of the Companies Act 2013 following Companies can avail Fast Track Process:-
STEPS OF FAST TRACK PROCESS
DETAIL PROCEDURE OF FAST TRACK PROCESS
> Both the Transferor and Transferee Company shall be authorized by their Articles of Association for merger. If Not they need to alter their Articles of Association. Merger shall be permissible as per the Object Clause of Memorandum of Association of both the Companies.
> Both the transferor and transferee company shall hold the Board Meeting for approving the draft scheme of merger
> Both the transferor and transferee companies shall file the draft scheme proposing the merger with the.
1. ROC where the Registered office of the respective Companies are situated and
2. Official Liquidator
3. Or persons affected by the Scheme
> Declaration of Solvency shall be filed by each Companies involved in the merger as per the provision of Section 233(1)(c) of the Companies Act 2013 read with Rule 25 (2) of The Companies (Compromise, Arrangements and Amalgamation) Rules, 2016.
> Pursuant to the provisions of section 233(1)(b) of the Act read with rule 25(3), both the companies shall obtain approval of members holding at least 90% of total no. of shares for the scheme. The Objections and suggestion received by ROC and OL shall also be considered by the companies in their respective general meeting.
> Pursuant to the provision of section 233(1)(d) of Act read with rule 25(3),the companies shall obtain the approval of their creditors in any of the below mentioned manner
1. Such scheme shall also be approved by the majority representing 9/10thvalue of creditors or class of creditors of the respective companies.
2. Such scheme shall also be approved in writing by the majority representing 9/10thvalue of creditors or class of creditors of the respective companies.
> Pursuant to the provisions of Rule 25(4), the transferee company, within 7 days of conclusion of meeting of members or class of members or creditors or class of creditors shall require to file with Regional Director along with following documents:
1. Copy of scheme as agreed to by members and creditors and
2. Report of Results of each of the meetings.
> Registrar of Companies and Official Liquidator may give objections or suggestions if any to the Regional director within 30 days of the receipt of the scheme. However where no objections or suggestions have been made, it shall be presumed that they have no objection to the scheme.
Where no objections or suggestions to the scheme are received from Registrar of Companies and Official Liquidator and Regional director is in opinion that scheme is in public interest or in the interest of creditors, the RD shall issue confirmation order which shall be deemed to be the order sanction the scheme of merger.
On the basis of Objections or suggestions made by ROC and OL or otherwise, RD is of opinion that scheme is not in public interest, it may file application before Tribunal within 60 days of receipt of the scheme and requesting Tribunal may consider the scheme under section 232 of the Act.
The Order of RD approving the scheme shall be filed with the ROC within 30days having jurisdiction over the transferee and transferor company.
FORMS RELATED TO FAST TRACK MERGER
|Form No||To be filed by||Particulars||Time Limit||Section and Rule|
|CAA9||Transferor and Transferee Company||To invite Objections or Suggestions from competent authority||233(1)(a) Rule 25(1)|
|CAA10||Transferor and Transferee Company||Declaration of Solvency||233(1)(C) Rule 25(1)|
|CAA11||Transferee Company||Filing of scheme of merger
approved by the members and
creditors with RD
|Within 7 days of approval of members and creditors||233(2) Rule 25(4)(a)|
|CAA12||Regional Director||Confirmation order for the
scheme of Merger by the RD
|–||233 Rule 25(2)|
E-FORMS TO BE FILED FOR FAST TRACK MERGER
|Form No||Particulars||To be filed by|
|GNL-1||The notice inviting objection from ROCs in form CAA 9||Transferor & Transferee Company|
|GNL-2||The Declaration of Solvency in Form CAA 10 is be to filed with the ROC||Transferor & Transferee Company|
|MGT-14||Board resolution and Special resolution passed for approving the scheme||Transferor & Transferee Company|
|GNL-1||Filing of scheme and Form CAA11 with the Regional
|RD-1||Report of meeting in Form CAA 11 is to be filed with the Regional Director||Transferee Company|
|INC-28||Confirmation order to be filed with ROCs.||Transferor & Transferee Company|
OTHER DOCUMENTS REQUIRED BY REGIONAL DIRECTOR
1. Certified Copy of list of Directors, shareholders and creditors of both the transferor and transferee companies.
2. Verified Facts regarding the subject companies having relationship of Holding and Wholly owned subsidiary company.
3. Shareholding Pattern of pre and post-merger of Transferee Company.
4. Audited Financial Statements and Directors’ reports of both the transferor and transferee companies for preceding three years.
5. Memorandum and Articles of Association of both the companies containing a clause empowering merger and amalgamation.
6. Details of Related Party Transactions entered into by both the companies.
7. Undertaking from the directors of the Transferee Company that no employees shall be adversely affected and accounting policies will not be altered.
8. A Certificate issued by Auditor of the Company to the effect that accounting treatment, if any, proposed in the scheme of merger is in conformity with the Accounting Standards prescribed under section 133 of the Companies Act, 2013.
9. Proof that the Authorized capital of the Transferee Company is sufficient to allot shares to the shareholders of the Transferor Company.
For further clarification please mail at [email protected]