Souvenir golden jubilee year national convention of company secretaries 46th edition and international conference 6th edition. It says several pertinent and relevant queries with regard to the companies act, 20 have been received from the stakeholders. The companies act 20 is an act of the parliament of india, divided into 29 chapters containing 470 sections and has 7 schedules. The provision of this chapter shall also apply to the scheme of mergers and amalgamations between companies registered under the companies act, 20 and companies incorporated in the jurisdictions of such countries as may be notified. The government, in consultation with the reserve bank of india rbi has also inserted rule 25a2 to amend the companies compromises.
Both the transferor and the transferee company shall make an application in the form of petition to the tribunal under section 230232 of the companies act, 20 for the puspose of sanctioning the scheme of amalgamation. Government makes rules relating to merger or amalgamation of. The requirement to appoint a company secretary in private limited company is governed by the provision of rule 8a and in public listed company by the provisions of rule 8 of the companies appointment and remuneration of managerial personnel chapter xiii under section 203 of the companies act, 20. Section 394 of the companies act contains provisions facilitating a scheme of reconstruction or amalgamation. Merger or amalgamation of company with foreign company effective from th april, 2017 1 the provisions of this chapter unless otherwise provided under any other law for the time being in force, shall apply mutatis mutandis to schemes of mergers and amalgamations between companies registered under this act and companies incorporated in the jurisdictions. Analysis and implications ajay kumar sharma opines on the recently enacted companies act, 20, passed after much parliamentary debate and analysis, presents newer challenges in field of crossborder mergers and amalgamations, and is not. The acquisition takeover bids fall under the purview of sebi. Recently, we have discussed in detail section 86 i. Merger and amalgamation of companies effective from 15th december, 20161 where an application is made to the tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the tribunal. Merger or amalgamation of company with foreign company effective from th april, 2017 1 the provisions of this chapter unless otherwise provided under any other law for the time being in force, shall apply mutatis mutandis to schemes of mergers and amalgamations between companies registered under this act and companies incorporated in.
Under the 1956 act, all mergers and amalgamations require court approval. It is a legal process by which two or more companies are joined together to form a new entity or one or more companies are absorbed by another company and. Introductionmore than three years ago, the companies act, 20 20 act was passed by both houses of parliament and received assent of the president of india. Appointment of company secretary under companies act, 20. In this blog post, nimisha srivastava, a student of gujarat national law university, gandhinagar, discusses mergers under the companies act, 20.
Tools of restructuring merger amalgamation demerger financial restructuring acquisition of shares deals with section 230 234 deals with section 235 236 under section 237 of companies act, 20 central government may amalgamate two companies in public interest consolidation of businesses entities divest noncore business acquiring. The companies act does not specifically define the terms mergers or amalgamations. Act, 20 thought it fit to bring out this ready referencer on companies act, 20, as a self learning aid to understand the basic tenets of the new act. Mar 01, 2017 tools of restructuring merger amalgamation demerger financial restructuring acquisition of shares deals with section 230 234 deals with section 235 236 under section 237 of companies act, 20 central government may amalgamate two companies in public interest consolidation of businesses entities divest noncore business acquiring. She has coauthored the book your queries on companies act, 20. The companies act is the primary legislation governing all companies in india. P rocedure for merger and amalgamation under companies act 20 1. Ascertain the stamp duty and vat impact, if any, on the sale.
Amalgamation amalgamation is an arrangement or reconstruction. Further, an officer of the transferor company transferee company, who. The icsi website addresses frequently asked questions on the companies act, 20. Section 232 of companies act, 20 merger and amalgamation. Notification of various under the companies act, 20 sections. Buy handbook on mergers amalgamations and takeovers. While the consideration for a merger is contemplated, an examination of the memorandum of association must be conducted to search and check whether the power of a merger is vested within it, in furtherance for permitting perpetuity on business post the. As per provisions of section 2307 of companies act, 20. Later on, a large number of changes were found to be necessary in the bill. While the changes are aimed at simplifying and rationalising the procedures involved, the new provisions are also aimed at ensuring higher accountability for the company and majority shareholders and increasing flexibility for. Jan 06, 2017 however, the companies act, 20 ca 20 without strictly defining the term explains the concept. Merger and amalgamation as for indian economy, by explaining a few arrangements of new companies act, 20. The study material is based on those sections of the companies act, 20 and the rules made there under which have been notified by the government of india and came into force w.
The table below sets out the procedure for fast track mergers together with the timeline specified. Introductory while framing a scheme of merger or amalgamation, a company has to fulfill the conditions prescribed under the company law as already discussed, but it has also to look after one very important aspect i. Faqs on companies act, 20 2nd edition the companies act, 20 series a guide to board evaluation revised edition west bengalease of doing business for msme sector. The ready referencer introduces readers to the new concepts in the companies act, 20 and lists out the salient features, of the law in a capsule form. The objective of this study lesson is to enable the students to understand an overview mergers, amalgamations takeovers concept of takeovers, its kinds etc. To encourage restructuring, merger and demerger has been given a special treatment in the incometax act since the beginning. Legal, accounting and taxation aspect of amalgamation. April 01, 2014 including amendmentsclarificationscirculars issued there under upto june, 2017. Under the erstwhile act, companies which have reached a consensus to merge must prepare a scheme of amalgamation merger scheme. Companies act 20 and any rules framed under this law. The transferee company transferor company would be liable to a fine of not less than rs. General procedure for amalgamation under companies act 20. Faqs on companies act, 20 2nd edition the companies act, 20 series.
Chapter xv of the 20 act, sections 230 to 240 deal with compromises, arrangements and amalgamations. The said section states that company means any company liable to be wound up under the act. Regulatory framework governing mergers amalgamations and takeovers sebi sast regulations, 2011 disclosures, exemptions public announcement etc. Procedure for merger and amalgamation under companies act.
The 20 act features some new provisions in the area of mergers and acquisitions, apart from making certain changes from the existing provisions. This is a welcome step which broadens the idea of globalization. It is a legal process by which two or more companies are joined together to form a new entity or one or more companies are absorbed by another company and as a. All corporate transactions, be it mergers, primarysecondary acquisitions or private equity funding, have to be implemented in accordance with the provisions of the companies act, 20, read with the rules framed thereunder. A merger is a combination of two or more entities into one. Section 233 deals with amalgamation of small companies also called fast.
The companies act, 20 has provided for fast track mergers, wherein certain classes of companies can merger as per the provisions laid down under section 233 of the companies act, 20. Law and practice book online at best prices in india on. Merger and amalgamation under companies act, 20 taxguru. Some important extracts of the document are reproduced as under. Handbook on mergers amalgamation and takeovers law and practice5th edition. Under the old act, sections 391 to 396 deal with compromises, arrangements and amalgamation, whereas chapter xv of the old act encompasses sections 230 to 240 governing compromises, arrangement and amalgamations. The procedure of merger under fast track merger scheme. Merger and amalgamation of companies effective from 15th december, 20161 where an application is made to the tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the tribunal a that the compromise or. The 20 act requires that mergers and amalgamations between two or more small companies or between holding companies and its whollyowned subsidiary or between such companies as may be prescribed does not require court approval.
Section 230231 deals with compromise or arrangements. A merger or amalgamation is an arrangement whereby the assets of two or more companies become vested in one company which may or may not be one of the original two companies. First step in this process is to draft a scheme of compromise or arrangement for restructuring or amalgamation. Read handbook on mergers amalgamations and takeovers. Amalgamation is a legal process by which two or more companies are joined together to form a new entity or one or more companies are to be absorbed or blended with another and as a consequence the amalgamating company loses its existence and its shareholders become the. This article highlights a few key changes made in the new act on mergers and amalgamations and the likely impact on industry. Mar 11, 2015 merger or amalgamation of a company with foreign company section 234. A guide to private mergers and acquisitions law in india. The 20 act seeks to replace the companies act, 1956 1956 act. The different provisions of the 20 act are being brought into effect in phases.
A takeover offer this chapter will focus on the rationale behind the introduction of statutory mergers under the companies act no. Companies amendment bill, 2003 had been introduced by ministry of corporate affairs mca then department of company affairs in the rajya sabha on 7. The act came into force on 12 september 20 with only 98 provisions of the act notified. Corporate restructuring merger and amalgamation company. Dec 24, 20 merger or amalgamation of a company with foreign company section 234. Both the transferor and the transferee company shall make an application in the form of petition to the tribunal under section 230232 of the companies act, 20 for the puspose of sanctioning the scheme of. Though chapter v of the companies act, 1956 comprising of sections 389 to 396a deals with the issue and related aspects covering arbitration. Government makes rules relating to merger or amalgamation. The institute of company secretaries of india released its frequently asked questions faqs on the companies act 20 on 25 th june 2014. Chapter xv section 230 to 240 of companies act, 20the. A gives a high level overview of key issues including corporate entities and acquisition methods, preliminary agreements, main documents, warranties and indemnities. Financial performance before and after mergers and acquisitions of the selected indian companies chapter1 introduction. The said section states that where an application is made to the court under section 391 and if it pertains to a scheme of reconstruction or amalgamation, or. Icsi house, 22, institutional area, lodi road, new delhi 110 003.
The merger is a combination of two or more entities into one, it is not just the accumulation of assets and liabilities of the distinct entities. The act creates a new regulator, the national law company tribunal hereinafter referred to as the tribunal who will assume jurisdiction of the court for sanctioning mergers. The legal procedure for bringing about merger of companies examining the object clauses. Section 87 of central goods and services tax act, 2017 12 of 2017 provides for liability in case of amalgamation or merger of companies under cgst act 2017. Section 234 provides for scheme of mergers and amalgamations between a company registered under the act and a foreign company and vice versa.
Compliance with the companies act is regulated by the ministry of corporate affairs, the registrar of companies, the regional directors and the national company law tribunal for mergers and amalgamations. Merger has not been defined under the ita but has been covered under the term amalgamation as defined in section 21b of the act. The notified sections will be effective from 15 december, 2016, and are likely to bring. May 25, 2017 a merger or amalgamation is an arrangement whereby the assets of two or more companies become vested in one company which may or may not be one of the original two companies.
Companies act, 20 has seen the light of day and replaced the 1956 act with some. Cross border mergers provisions under the companies act, 20. Legal and regulatory dimensions of macr as per companies act, 20. The queries which were common and related have been compiled together and response to the same is being provided in the form of. Companies act, 20 allows both inbound and outbound crossborder mergers and amalgamations between indian and foreign companies. The act has replaced the companies act, 1956 after receiving the assent of the president of india on 29 august 20. The table below sets out the procedure for fast track mergers together with the.
Legal procedure for merger of companies racolb legal. Section 233 of the companies act, 20 read with rule 25 of the companies. However, the regulatory framework for controlling the takeover activities of a company consists of the companies act, 1956, listing. This section provides interpretation for the purposes of section 391 and 393.
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