Financial performance before and after mergers and acquisitions of the selected indian companies chapter1 introduction. The different provisions of the 20 act are being brought into effect in phases. 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. 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. Corporate restructuring merger and amalgamation company. Later on, a large number of changes were found to be necessary in the bill. 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. Mar 11, 2015 merger or amalgamation of a company with foreign company section 234. Under the 1956 act, all mergers and amalgamations require court approval. 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. The table below sets out the procedure for fast track mergers together with the.
Procedure for merger and amalgamation under companies act. P rocedure for merger and amalgamation under companies act 20 1. Dec 24, 20 merger or amalgamation of a company with foreign company section 234. 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. Appointment of company secretary under companies act, 20. 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. 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 notified sections will be effective from 15 december, 2016, and are likely to bring. The procedure of merger under fast track merger scheme. Souvenir golden jubilee year national convention of company secretaries 46th edition and international conference 6th edition. Regulatory framework governing mergers amalgamations and takeovers sebi sast regulations, 2011 disclosures, exemptions public announcement etc. Vinita nair dedhia holds a degree in bachelor of management studies bms. The companies act is the primary legislation governing all companies in india.
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. The acquisition takeover bids fall under the purview of sebi. Handbook on mergers amalgamation and takeovers law and practice5th edition. The transferee company transferor company would be liable to a fine of not less than rs. Section 394 of the companies act contains provisions facilitating a scheme of reconstruction or amalgamation. Legal procedure for merger of companies racolb legal. Under the erstwhile act, companies which have reached a consensus to merge must prepare a scheme of amalgamation merger scheme. A merger is a combination of two or more entities into one. Chapter xv section 230 to 240 of companies act, 20the. 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. The 20 act seeks to replace the companies act, 1956 1956 act. Section 234 of companies act, 20 merger or amalgamation. Section 234 provides for scheme of mergers and amalgamations between a company registered under the act and a foreign company and vice versa. Cross border mergers provisions under the companies act, 20.
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. 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. A gives a high level overview of key issues including corporate entities and acquisition methods, preliminary agreements, main documents, warranties and indemnities. Law and practice book online at best prices in india on. 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. Recently, we have discussed in detail section 86 i. Faqs on companies act, 20 2nd edition the companies act, 20 series.
Read handbook on mergers amalgamations and takeovers. Companies act, 20 allows both inbound and outbound crossborder mergers and amalgamations between indian and foreign companies. 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 government, in consultation with the reserve bank of india rbi has also inserted rule 25a2 to amend the companies compromises. 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. Ascertain the stamp duty and vat impact, if any, on the sale. The companies act 20 is an act of the parliament of india, divided into 29 chapters containing 470 sections and has 7 schedules. A brief background to the introduction and status of the companies act 20 is as under.
Section 232 of companies act, 20 merger and amalgamation. However, the companies act, 20 ca 20 without strictly defining the term explains the concept. Merger has not been defined under the ita but has been covered under the term amalgamation as defined in section 21b of the act. First step in this process is to draft a scheme of compromise or arrangement for restructuring or amalgamation.
Some important extracts of the document are reproduced as under. Companies act 20 and any rules framed under this law. Icsi house, 22, institutional area, lodi road, new delhi 110 003. Jan 06, 2017 however, the companies act, 20 ca 20 without strictly defining the term explains the concept. General procedure for amalgamation under companies act 20. As per provisions of section 2307 of companies act, 20. Government makes rules relating to merger or amalgamation. The legal procedure for bringing about merger of companies examining the object clauses. Section 232 deals with mergers and amalgamation including demergers. The 20 act features some new provisions in the area of mergers and acquisitions, apart from making certain changes from the existing provisions. Further, an officer of the transferor company transferee company, who.
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. 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. 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. This is a welcome step which broadens the idea of globalization. A takeover offer this chapter will focus on the rationale behind the introduction of statutory mergers under the companies act no. 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. 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. The objective of this study lesson is to enable the students to understand an overview mergers, amalgamations takeovers concept of takeovers, its kinds etc. Legal, accounting and taxation aspect of amalgamation. The table below sets out the procedure for fast track mergers together with the timeline specified. The institute of company secretaries of india released its frequently asked questions faqs on the companies act 20 on 25 th june 2014. The act has replaced the companies act, 1956 after receiving the assent of the president of india on 29 august 20. To encourage restructuring, merger and demerger has been given a special treatment in the incometax act since the beginning. Buy handbook on mergers amalgamations and takeovers.
Merger and amalgamation as for indian economy, by explaining a few arrangements of new companies act, 20. 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. This section provides interpretation for the purposes of section 391 and 393. The said section states that company means any company liable to be wound up under the act. Chapter xv of the 20 act, sections 230 to 240 deal with compromises, arrangements and amalgamations. 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. 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. Notification of various under the companies act, 20 sections.
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. This article highlights a few key changes made in the new act on mergers and amalgamations and the likely impact on industry. Companies amendment bill, 2003 had been introduced by ministry of corporate affairs mca then department of company affairs in the rajya sabha on 7. Merger and amalgamation under companies act, 20 taxguru. Amalgamation amalgamation is an arrangement or reconstruction. 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. The icsi website addresses frequently asked questions on the companies act, 20. 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.
April 01, 2014 including amendmentsclarificationscirculars issued there under upto june, 2017. 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. However, the regulatory framework for controlling the takeover activities of a company consists of the companies act, 1956, listing. 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. 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. Government makes rules relating to merger or amalgamation of. 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 233 of the companies act, 20 read with rule 25 of the companies. Though chapter v of the companies act, 1956 comprising of sections 389 to 396a deals with the issue and related aspects covering arbitration. 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. A guide to private mergers and acquisitions law in india.
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. In this blog post, nimisha srivastava, a student of gujarat national law university, gandhinagar, discusses mergers under the companies act, 20. It says several pertinent and relevant queries with regard to the companies act, 20 have been received from the stakeholders. The companies act does not specifically define the terms mergers or amalgamations. 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. Companies act, 20 has seen the light of day and replaced the 1956 act with some.
The act came into force on 12 september 20 with only 98 provisions of the act notified. Section 233 deals with amalgamation of small companies also called fast. 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. She has coauthored the book your queries on companies act, 20. The institute as part of its capacity building initiatives under the companies 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.
803 305 1516 236 319 541 326 936 1655 167 294 1163 936 1127 459 1661 1566 859 915 944 1323 804 1570 34 1391 1589 253 622 546 369 692 624 330 1012 404 244 882 965 1181 726 1331