The ministry of corporate affairs has notified changes to the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023.
In a move aimed at improving ease of doing business, the government has streamlined and expedited the process of corporate mergers and amalgamations.
The ministry of corporate affairs has notified changes to the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023. The norms, which will be effective from June 15, aim to address the issue of bureaucratic delays in corporate restructuring by putting in place specific timelines.
In cases of amalgamation or merger where no objection or suggestions are received from the Registrar of Companies and the official liquidator within 30 days of the receipt of a copy of the scheme, the Centre can issue a confirmation order within 15 days provided that the scheme is in the public interest or in the interest of creditors.
If any objections or suggestions are received from the RoC and official liquidator and the Centre has found these objections to be unsustainable and the scheme is determined to be in the public interest, it may issue a confirmation order within 60 days. In cases where the merger or amalgamation is not beneficial to the public interest, the Centre can file an application before the Tribunal for a review.
Further, where the Centre fails to issue a confirmation order within 60 days, the merger or amalgamation scheme will be deemed to be approved.
At present there is no specified time period for the approval from the RoC, official liquidator and the Centre where the transferee company has filed a scheme copy for the approval of the merger or amalgamation.
With the introduction of these amendments, it demonstrates the MCA’s commitment to facilitating a smooth, more efficient and fast-track process for merger or amalgamation schemes for start-ups or small companies or both, which will also ensure safeguarding the interest of creditors and fostering transparency and accountability to creating a conducive environment for growth and development of business
These amendments are poised to revolutionise the mergers and amalgamations process, enhancing efficiency and expediency,” he said, adding that it is imperative to note that these changes remain inherently restrictive in nature, focusing primarily on schemes that uphold public interest
Through these amendments, the Indian government seeks to strike a delicate balance between facilitating corporate growth and safeguarding the broader interests of the public and creditors
Bare Text of Notification
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 15th May, 2023
G.S.R. 367(E).—In exercise of the powers conferred by sub-sections (1) and (2) of section 469 read with section 233 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, namely :-
1. Short title and commencement.‐
(1) These rules may be called the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023.
(2) They shall come into force with effect from 15th day of June, 2023.
2. In the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, for sub-rules (5) and (6) of rule 25, the following sub-rules shall be substituted, namely:-
“(5) Where no objection or suggestion is received within a period of thirty days of receipt of copy of scheme under sub-section (2) of section 233, from the Registrar of Companies and Official Liquidator by the Central Government and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, it may, within a period of fifteen days after the expiry of said thirty days, issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12:
Provided that if the Central Government does not issue the confirmation order within a period of sixty days of the receipt of the scheme under sub-section (2) of section 233, it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.
(6) Where objections or suggestions are received within a period of thirty days of receipt of copy of scheme under sub-section (2) of section 233 from the Registrar of Companies or Official Liquidator or both by the Central Government and –
(a) such objections or suggestions of Registrar of Companies or Official Liquidator, are not sustainable and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, it may within a period of thirty days after expiry of thirty days referred to above, issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12.
(b) the Central Government is of the opinion, whether on the basis of such objections or otherwise, that the scheme is not in the public interest or in the interest of creditors, it may within sixty days of the receipt of the scheme file an application before the Tribunal in Form No. CAA.13 stating the objections or opinion and requesting that Tribunal may consider the scheme under section 232 of the Act:
Provided that if the Central Government does not issue a confirmation order under clause (a) or does not file any application under clause (b) within a period of sixty days of the receipt of the scheme under sub-section (2) of section 233 of the Act, it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.”.
[F. No. 2/31/CAA/2013 – CL.V Part]
MANOJ PANDEY, Jt. Secy.
