Can a Limited Liability Partnership be merged with a Company? Under what provision can the merger or amalgamation of a Limited Liability Partnership with a Company be sanctioned?
In the economic world, many companies merge with another company; the concept behind the said merger and amalgamation being to create synergy by establishing such norms which are conducive for development of both the companies.
From a legal viewpoint, a company can only merge with the companies registered under the Companies Act, 2013, or with a foreign entity; there is a similar provision for the Limited Liability Partnership (LLP) under Limited Liability Act, 2008. But both the Acts are silent on the issue whether an LLP can merge with a company and vice versa.
Since there was no resolution to the aforesaid loophole, the National Company Law Tribunal, Chennai, has passed an order sanctioning the Scheme of Amalgamation of an LLP into a Company. M/s Real Image LLP with M/s Qude Cinema Technologies Pvt. Ltd. (CP/123/CAA/2018) On June 11, 2018, the Chennai Bench passed an astounding order where they sanctioned the Scheme of Amalgamation of an LLP into a Company. The Application for Amalgamation was filed under section 230 to 232 of the Companies Act, 2013.
- The Bench held that the purpose for enacting both the LLP Act 2008 and the Companies Act 2013 is to facilitate the ease of doing business and create a desirable business atmosphere for the companies and LLPs.
- That both the Acts provide the provision of amalgamation. The issue involved in the said petition has been categorically dealt with by the Companies Act, 1956, whereas there is no specific provision in the Companies Act, 2013. Therefore, this is the clear case of "casus omissus".
- It was further held that if the intention of the parliament is to permit a foreign LLP to merge with an Indian Company, then it would be wrong to presume that the Act prohibits a merger of an Indian LLP with an Indian Company.
- Thus, there does not appear any express legal bar to allow/sanction merger of an Indian LLP into an Indian Company.
In view of the above order, it is clear that now an Indian LLP can amalgamate with an Indian Company without the need for proposal of new amendments in the present Acts as the NCLT has correctly interpreted the gap in the law.
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