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Published : March 03, 2017 | Author : anishak31
Category : Company Law | Total Views : 672 | Unrated

  
anishak31
Lawyer and Company Secretary
 

Fast Track mergers

Procedure For Fast Track Merger Under Section 233of The Companies Act, 2013 (“Act”) Read The Companies (Compromises, Arrangements And Amalgamations) Rules, 2016 (“Rules”)
 
The Companies Act, 2013, dispenses with the cumbersome and time consuming process for mergers provided for under the Companies Act, 1956 and lays down a simple, fast track merger procedure for the merger of certain companies like holding and subsidiary companies, and small companies.  This new move seems like a simplified procedure, and a move in the right direction with regards to the class of companies covered under these provisions. Laid out below is a step by step procedure setting out the procedure and timelines for the transferor and transferee company:

Step No. Procedure Timeline Forms B
1. Convene a Board Meeting  
  Convene a Board Meeting and pass the following resolutions:
a)    Approval of the scheme;
b)    Fixing date, time and place for convening of shareholders meeting;
c)     Fixing date, time and place for convening of creditors meeting.
    Both (Transferor and Transferee Companies)
2. Notice of the proposed scheme  
  The notice of the proposed scheme inviting objections or suggestions, if any, shall be sent to the Registrar of Companies (“ROC”) and Official Liquidators where registered office of the respective
companies are situated or persons affected by the scheme along with a copy of the Scheme.
After holding the Board meeting CAA.9 Both (Transferor and Transferee Companies)
3. Filing a declaration of solvency with the ROC  
  Each of the companies involved merger files a declaration of solvency, in the prescribed form, with the ROC where the registered office of the company is situated, before convening the meeting of members and creditors for approval of the scheme.   CAA.10 Both (Transferor and Transferee Companies)
       
4. Convening a meeting of members      
  The notice of the meeting sent to the creditors shall be accompanied by –
a)    a statement, disclosing the details of the compromise or arrangement, as far as applicable, as referred to in sub-section 230 (3) of the Act read with sub-rule (3) of rule 6 of the Rules.
b)     the declaration of solvency made in Form No. CAA.10;
c)      a copy of the scheme.
 
The objections and suggestions received by the ROC, Official Liquidator and persons affected by the scheme are considered by the companies in their respective general meetings and the scheme is approved by the respective members or class of members at a general meeting holding at 90% of the total number of shares.
Clear 21 days before the date of the meeting   Both (Transferor and Transferee Companies)
5. Convening a meeting of creditors  
  The notice of the meeting sent to the members shall be accompanied by –
a)    a statement, disclosing the details of the compromise or arrangement, as far as applicable, as referred to in sub-section 230 (3) of the Act read with sub-rule (3) of rule 6 of the Rules.
b)    the declaration of solvency made in Form No. CAA.10;
c)      a copy of the scheme.
 
The scheme is to be approved by majority representing nine-tenths in value of the creditors or class of creditors of respective companies indicated in a meeting.
Clear 21 days before the date of the meeting   Both (Transferor and Transferee Companies)
6. Filing of the Scheme      
  a)    File a copy of Scheme and report of the result of each of the meetings with the Regional Director.
 
b)    A copy of the scheme along with Form CAA. 11 shall also be filed with :
 
·   the ROC in Form GNL 1;
 
·   the Official Liquidator through hand delivery or by registered post or speed post.
a)    Within seven days from the conclusion of the meeting of members or creditors. a)    CAA.11


b)    GNL 1
Transferee Company
7. Approval of the Scheme by the Regional Director      
  1.     On the receipt of the scheme, if the ROC or the Official Liquidator has no objections or suggestions to the scheme, the Regional Director shall register the same and issue a confirmation thereof to the companies.


2.     If the ROC or Official Liquidator has any objections or suggestions, he may communicate the same in writing to Regional Director within a period of thirty days. If no such communication is made, it shall be presumed that he has no objection to the scheme.


3.     If the Regional Director after receiving the objections or suggestions or for any reason is of the opinion that such a scheme is not in public interest or in the interest of the creditors, it may file an application before the Tribunal in Form No. CAA.13 within a period of sixty days of the receipt of the scheme under sub-section (2) stating its objections and requesting that the Tribunal may consider the scheme under section 232.


4.     On receipt of an application from the Regional Director or from any person, if the Tribunal, for reasons to be recorded in writing, is of the opinion that the scheme should be considered as per the procedure laid down in section 232, the Tribunal may direct accordingly or it may confirm the scheme by passing such order as it deems fit.


5.     If the Regional Director does not have any objection to the scheme or it does not file any application under this section before the Tribunal, it shall be deemed that it has no objection to the scheme.


6.     Where no objection or suggestion is received to the scheme from the ROC and Official Liquidator or where the objection or suggestion of ROC and Official Liquidator is deemed to be not sustainable and the Regional Director is of the opinion that the scheme is in the public interest or in the interest of creditors, the Regional Director shall issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA. 12.
8. Filing of confirmation order with the ROC      
  A copy of the order confirming the scheme by the Tribunal or Regional Director shall be communicated to the ROC having jurisdiction over the transferee company and the persons concerned and the ROC shall register the scheme and issue a confirmation to the companies and such confirmation shall be communicated to the ROC where transferor company or companies were situated. Within 30 days of the receipt of the order of confirmation of the scheme. Form INC-28 Both (Transferor and Transferee Companies)



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