News and developments
Streamlining Corporate Mergers and Amalgamations: Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023
These rules, effective from June 15, 2023, streamline and expedite the process of corporate mergers and amalgamations. By introducing new provisions and timelines, the Amendment Rules seek to simplify the amalgamation process outlined in the Companies Act, 2013.
Conclusion
To conclude, in both the abovementioned Sub-Rules, the MCA has introduced the provision of deemed approval, and a strict timeline has been adopted to keep the authorities under check. Such deemed approval provisions will promote accountability by holding authorities responsible for timely decision-making.
Author by: Mr. Himanshu Goswami, Partner, and Ms. Prableen Kaur Chandhok, Associate, representing Goswami & Nigam LLP.
Footnotes [1] G.S.R. 127 (E), dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade
Understanding Amalgamation under the Companies Act, 2013
Under the Companies Act, 2013, amalgamation refers to the legal process of combining two or more companies into a single entity. It involves the merging of assets, liabilities, and operations of the amalgamating companies to form a new company or merge them into an existing company. The Act provides a framework for the amalgamation process, including the preparation of a scheme of amalgamation, approval by the shareholders and creditors of the involved companies, and obtaining necessary regulatory and court approvals. For the purposes of this article, we will limit our understanding to Section 233 of the Companies Act, 2013 (“Act”) read with Rules 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (“Rules”).Section 233 of the Companies Act, 2013 and its Applicability
Section 233 of the Act puts in place a universally accepted proposition of a Fast Track Process with respect to mergers and amalgamations. However, it limited its applicability to only certain classes of companies, which are:- Two or more start-up companies;
- One or more start-up companies with one or more small companies;
- Between two or more small companies;
- Between a holding company and its wholly-owned subsidiary company.
Amendment to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
Amendment Rules Prior to 2023 Sub Rule 5: Pursuant to sub-rule 5 of Rule 25, the Central Government had the power to issue an order of confirmation to the scheme of merger or amalgamation if the Central Government was satisfied as one of the following:- No objection or suggestion is received from the Registrar of Companies or Official Liquidator; or
- Objection or suggestion received is deemed to be not sustainable.
- On the basis of such objections or suggestions; or
- Otherwise
![](https://www.legal500.com/developments/wp-content/uploads/sites/19/2023/06/Screenshot-2023-06-05-120610-300x296.png)
Author by: Mr. Himanshu Goswami, Partner, and Ms. Prableen Kaur Chandhok, Associate, representing Goswami & Nigam LLP.
Footnotes [1] G.S.R. 127 (E), dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade