India:
MCA Seeks To Expedite The Merger Process For Certain Companies
26 May 2023
Nexdigm Private Limited
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The Ministry of Corporate Affairs (MCA) notified the Companies
(Compromises, Arrangement and Amalgamations) Amendment Rules, 2023
(Amendment Rules), being effective from 15 June 2023. The Amendment
Rules seek to modify the process governing the merger of a certain
class of companies popularly known as 'fast-track
merger'.
The gist of all Amendment Rules are summarized below:
Amendments |
Comments |
Sub-rule 5 of the rule 25 of the Companies
(Compromises, Arrangement and Amalgamations) Rules, 2016 has been
substituted with following rule:
"[(5) Where no objection or suggestion is received within a
period of thirty days of receipt of copy of scheme under
sub-section (2) of section 233, from the Registrar of Companies and
Official Liquidator by the Central Government and the Central
Government is of the opinion that the scheme is in the public
interest or in the interest of creditors, it may, within a period
of fifteen days after the expiry of said thirty days, issue a
confirmation order of such scheme of merger or amalgamation in Form
No. CAA.12:
Provided that if the Central Government does not issue the
confirmation order within a period of sixty days of the receipt of
the scheme under sub-section (2) of section 233, it shall be deemed
that it has no objection to the scheme and a confirmation order
shall be issued accordingly.]" |
- This amendment has inserted specific timelines for the
Registrar of Companies (ROC) and the Official Liquidator (OL) to
object/provide their suggestions on the scheme of merger and to the
Central Government (CG) to issue confirmation order of such
scheme.
- Pursuant to this amendment:
- The ROC and OL are mandated to object/provide suggestions
within 30 days of filing of scheme.
- It has further empowered the CG (power delegated to the
Regional Director)] to issue a confirmation order on such scheme in
Form CAA.12 within 15 days of the expiry of the said 30 days in
case there is no response from the ROC and OL office, and the CG is
of the opinion that the scheme is in the public interest or in the
interest of creditors.
- Deemed approval proviso: This amendment
has also brought in a 'deemed approval' proviso, pursuant
to which, in case the CG does not issue confirmation
order/objections within 60 days of the receipt of the scheme, then
it shall be deemed that the CG has no objection and the merger
scheme shall be deemed to be approved, and the CG is obliged to
issue a confirmation order accordingly.
|
Sub-rule 6 of the rule 25 of the Companies (Compromises,
Arrangement and Amalgamations) Rules, 2016 has been substituted
with following rule:
"[(6) Where objections or suggestions are received within a
period of thirty days of receipt of copy of scheme under
sub-section (2) of section 233 from the Registrar of Companies or
Official Liquidator or both by the Central Government and -
(a) such objections or suggestions of Registrar of Companies or
Official Liquidator, are not sustainable and the Central Government
is of the opinion that the scheme is in the public interest or in
the interest of creditors, it may within a period of thirty days
after expiry of thirty days referred to above, issue a confirmation
order of such scheme of merger or amalgamation in Form No.
CAA.12
(b) the Central Government is of the opinion, whether on the basis
of such objections or otherwise, that the scheme is not in the
public interest or in the interest of creditors, it may within
sixty days of the receipt of the scheme file an application before
the Tribunal in Form No. CAA.13 stating the objections or opinion
and requesting that Tribunal may consider the scheme under section
232 of the Act:
Provided that if the Central Government does not issue a
confirmation order under clause (a) or does not file any
application under clause (b) within a period of sixty days of the
receipt of the scheme under subsection (2) of section 233 of the
Act, it shall be deemed that it has no objection to the scheme and
a confirmation order shall be issued accordingly.]" |
- In continuation to the above amendment, this amendment provides
specific timelines for the CG in case any objection/suggestions are
received from the ROC/OL:
- In case the CG is of the opinion that such
objections/suggestions are not sustainable and the scheme is in
public interest or of creditors, the CG is empowered to issue a
confirmation order of such scheme within 60 days of the receipt of
the scheme; and
- Where on the basis of objections or otherwise, the CG is of the
opinion that the scheme is not in public interest or in the
interest of creditors, it may within 60 days of the receipt of the
scheme, file an application before the Tribunal in Form No. CAA.13
stating the objections or opinion and requesting that the Tribunal
may consider the scheme under Section 232 of the Act:
- Deemed approval proviso: This amendment
has also brought in a 'deemed approval' proviso, pursuant
to which, in case the CG neither issues a confirmation order nor
files an application to the Tribunal within 60 days of receipt of
the scheme, then it shall be deemed that the CG has no objection
and the merger scheme shall be deemed to be approved, and the CG is
obliged to issue a confirmation order accordingly.
|
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