At present, Sections 391 and 394 of the Companies Act specify that M&A activity be referred to the high court for sanction. DCA is at present framing guidelines for mergers and amalgamations and this corporate function will come under the departments purview after the NCLT comes into existence, official sources said. At present, mergers and amalgamations need sanction of the respective high courts, after the board of directors of the companies involved have approved such a scheme.
The DCA proposal, along with several others, is expected to be discussed at a meeting of the Parliamentary Standing Committee of Finance which is slated to meet this week, official sources said.
The cabinet had cleared the proposal for setting up an apex law tribunal for corporates and a bill to amend the Companies Act for this purpose was tabled in Parliament last year, sources said. The Centre also intends to repeal Sick Industrial Companies Act (SICA) and wind up the Board for Industrial and Financial Reconstruction (BIFR), while proposing changes in the definition of a sick company and framing guidelines for approval of rehabilitation package for such companies. Under SICA, promoters of sick companies were provided immunity from further debts, once they came to the BIFR. But we will allow no such immunity under the new guidelines, sources said.