COMPROMISES ARRANGEMENTS AND AMALGAMATIONS
Section 233 of Company Act, 2013 i.e. Fast Track Merger read with Rule 25 of The Companies (Compromises Arrangements and Amalgamations) Rules 2016.
Why Fast Track Merger?
Under the Companies Act, 1956 all the mergers and restructurings had to go through with lengthy proceedings. Also, the intervention of the High Court was mandated thus making the process very time-consuming.
The Fast Track merger covered under section 233 of the Companies Act, 2013 requires approval from shareholders, creditors, Registrar of Companies, Official Liquidator, and Regional Director.
Very Simple Analysis (Step by step) of this Section is as below:- Inclusive of ROC forms
1. Applies on the merger of two or more small companies and wholly own subsidiary.
It is called a fast track merger because NCLT approval not required and formalities of section 232 need not to comply.
2. BR at BM will be passed by both companies to approve the draft scheme of the merger.
3. Notice in Form CAA – 9 given by both companies to respective Roc and Official Liquidators inviting their objection and suggestion within 30days.
4. Convene a GM to discuss those objections and suggestions and get the scheme approved by shareholders having at least 90% shares.
5. File declaration of solvency in Form CAA – 10 by both companies to their ROC.
6. Call creditors meeting by giving at least 21 days’ notice and get the scheme to approve by the majority in number 90% value.
7. Submit the scheme to CG in Form CAA – 11 to ROC Form CAA – 11 with Form GNL – 1 and also to the official liquidator. This will be done only by the Transferee Company.
8. If there is no objection submitted by ROC and official liquidator within 30 days to CG than CG may confirm the scheme in Form CAA – 12.
9. CG because of any objection or any other reason feels that the scheme is not in the public interest and creditors interest than it may refer the case to NCLT in Form CAA – 13 so that NCLT may consider it Under Section 232, CG will do so within 60 days of receiving Form CAA – 11.
10. If NCLT passes the order of merger it shall be filed within 30 days to ROC in Form INC – 28.
11. The transferor company will be dissolved without a winding-up procedure.
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