Revised Rules Streamline Merger and Amalgamation Processes

Companies (Compromises, Arrangements, and Amalgamations) Amendment Rules, 2023)

The Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 have recently undergone significant amendments to simplify and expedite the approval process for schemes of merger and amalgamation. The revised provisions introduce clearer guidelines and timelines, aimed at reducing bureaucratic delays and ensuring the interests of all stakeholders are adequately protected.

Under the amended rules, if no objection or suggestion is received within a period of 30 days from the Registrar of Companies and Official Liquidator, the Central Government has the authority to issue a confirmation order within 15 days. This confirmation order, issued in Form No. CAA.12, signifies that the Central Government deems the scheme to be in the public interest or in the interest of creditors. Moreover, if the Central Government fails to issue the confirmation order within 60 days of receiving the scheme, it is deemed that the Central Government has no objection and a confirmation order will be automatically issued accordingly.

In cases where objections or suggestions are received within 30 days from the Registrar of Companies or Official Liquidator or both, the Central Government has two options. Firstly, if the objections or suggestions are found to be unsustainable and the scheme is deemed to be in the public interest or in the interest of creditors, the Central Government may issue a confirmation order within 30 days after the expiry of the initial 30-day period. Secondly, if the Central Government believes that the scheme is not in the public interest or in the interest of creditors, whether based on the objections received or otherwise, it can file an application before the Tribunal in Form No. CAA.13 within 60 days of receiving the scheme. This application presents the objections or opinions and requests the Tribunal to consider the scheme under section 232 of the Act.

The latest amendments are a welcome development as they strike a balance between expeditious decision-making and ensuring proper scrutiny of merger and amalgamation schemes. By establishing clearer timelines and eliminating unnecessary delays, the revised rules aim to foster a more efficient and transparent process. These changes are expected to boost investor confidence, facilitate smoother transactions, and encourage businesses to adapt to market dynamics effectively.

The revised Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 are anticipated to have a positive impact on the mergers and acquisitions landscape, promoting ease of doing business and supporting the government’s vision of fostering economic growth through corporate restructuring and consolidation. With these revised rules now in effect, India aims to enhance its position as an attractive destination for business investments.

[1] https://www.mca.gov.in/bin/dms/getdocument?mds=1Wyd8lldgilFPq8Dx6A3QA%253D%253D&type=open