Mergers and acquisitions are one of the most effective methods of restructuring whether it’s about business elimination or expansion. Strategic mergers with an aim to collaborate can assist survive the competition. However, M & A are complex transactions that include multiple compliances under Indian laws. This article caters to key compliances for mergers and acquisitions under the Companies Act, 2013 in India that the merging companies should ensure ahead of their mergers.
The Companies Act, 2013
Companies Act, 2013 lays down unambiguous provisions governing the M & A of entities and body corporates, comprising that with foreign companies. Under Merger and Acquisition, relevant sections deal with mergers and acquisitions between sections 230 to 240. Apart from this, the entities should also comply with the Companies Rules, 2016.
This article includes key compliances for M & A under the Companies Act, 2013
Section 232: Broad Provisions Governing Mergers and Amalgamations of Companies
- The application for M & A of entities shall be filed with the NCLT in Form No.- NCLT-1. After filing the application, the tribunal shall order the conduct of a meeting of the creditors and members.
- The companies shall conduct a meeting as ordered
- The tribunal may sanction the amalgamation by order after being fulfilled.
- The companies shall file a certified copy of the order with the registrar within 30 days of receipt of the same.
- The entities shall file a statement representative of whether the scheme of M & A has been carried out in reference to the order of the tribunal. The statement shall be filed with the registrar after being certified by a Chartered Accountant, Cost Accountant, or a Company Secretary in practice.
Section 233: Fast Track Merger
- The companies mentioned below can adopt the fast-track merger route:
- Two or more small companies
- Two or more start-up companies
- A holding company and its wholly-owned subsidiary company
- One or more start-up companies with one or more small companies
- The transferee company shall file an application with the registrar representing the revised authorised share capital. The fees for the revised share capital shall be paid. The fees paid for the prevailing share capital shall be set off against the fees for revised share capital.
Under Mergers and Acquisitions Advisory, one business buys another and incorporates it into its business model. The compliances for mergers and acquisitions in India under the Companies Act, 2013. In case of any query, please feel free to contact the ASC Group.
