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.
Experts noted that 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,” said Jitin Aggarwal- Director (Audit and Advisory), SW India.
Amit Agarwal, Partner, Nangia & Co, said overall, the amendment represents a significant step in India’s corporate restructuring arena. “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,” he however, said.