Date : 17-08-2018 16:29
INTRODUCTION: Merger usually occurs when two companies’ usually of the same size come together to form a whole new different organization in which generally both share equal control. Merger and acquisition are basically done with an objective of increasing the scope of business and for achieving certain objectives.
The companies’ act of 2013 lays down the procedure for fast-track mergers under section 233 of the CA, 2013 for small companies and for companies with their wholly owned subsidiaries.
Earlier what used to happen was that the act carried different provisions to be complied with and procedures to be followed by the applicant companies also to acquire approval from many different regulatory bodies as well as under the direction of the central government. Therefore, the process of fast-track merger was adopted in order to expedite the process and to make it less complicated.
PROCEDURE FOR FAST TRACK MERGERS:
Issuing Notice: this notice is to be issued under section 223 (1)(a) of the companies’ act 2013 basically for inviting objections if any from the registrar of companies’, official liquidator, persons who may be affected by the merger.
Limitation: since the whole idea of is introducing this concept is to save the time, a period of 30 days is provided for inviting suggestions or objections from the abovementioned persons.
General Meeting: it should be held in order to share a state of solvency and a declaration as to that, a copy of the scheme and a statement providing the details of arrangement and a notice of this meeting is to be sent to members and creditors of the company.
Shareholder’s Approval: it should be obtained in the meeting after discussing it with the shareholders and 90% of them should agree to the same.
Creditor’s Approval: a separate meeting as to creditor’s approval for the scheme shall be convened. And a copy of such shall be filed with the central government, ROC and official liquidator within 7 days of such conclusion. Official liquidator or ROC shall communicate objections if any within a period of 30 days.
Issuing Order: if no objections and suggestions is given by the registrar or liquidator central government would register and issue an order regarding the same.
Filing of the Order: the confirmation obtained shall be filed with the ROC within 30 days for registration.
CONCLUSION: this process will help small companies to grow faster and increase the scope of their operation and get a chance of standing out in the competitive market.