, What to do in Fast Track Merger ~ CS GAURAV SHARMA

Tuesday, September 12, 2017

What to do in Fast Track Merger

The procedure for the fast track merger process is prescribed under Section 233 of the 2013 Act read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and broadly envisages the following steps:

Notice inviting objections and suggestions from regulatory bodies/affected persons

Each company involved in the Scheme is required to issue a notice in prescribed form for inviting objections and suggestions from the jurisdictional Registrar of Companies (ROC), the Official Liquidator (OL) and persons likely to be affected by the Scheme, within 30 days from the date of the notice.

Filing of declaration of solvency

Each company involved in the Scheme is required to file a declaration of solvency with the jurisdictional ROC.

Convening shareholders' and creditors' meetings

The objections/suggestions received by the regulatory bodies and affected persons are considered by the companies in their respective general meetings. The Scheme must be approved by: (i) members holding atleast 90% of the total number of shares and; (ii) majority in number representing 9/10th in value of the creditors, which should be indicated either in a creditors' meeting or in writing.

Filing of Scheme with CG, ROC and OL

Within 7 days from conclusion of the meeting of the members and creditors (if required), the transferee company is required to file: (a) a copy of the approved Scheme and; (b) report of the result of members' and creditors' meetings, with the CG and the jurisdictional ROC and OL.

Registration of the Scheme by CG

Non-communication/non-receipt of objections/suggestions to Scheme:
If, within 30 days of filing of Scheme, the CG does not receive any objections/suggestions to the Scheme from the ROC or OL, it is presumed that they have no objections to the Scheme, and the CG registers the Scheme by issuing a confirmation order to the companies involved.

Communication of objections/suggestions to the Scheme:
If, within 30 days of filing of Scheme, the CG receives objections/suggestions to the Scheme from the ROC or OL, then there are two possible scenarios:

If the CG, after receipt of objections/ suggestions from ROC/OL or for any reason is of the opinion that Scheme is not in public interest or in the interest of the creditors: then the CG may file an application to the Tribunal within 60 days of the receipt of the Scheme, stating its objections and requesting that the Tribunal may consider the Scheme under the regular procedure prescribed under Section 232 of the 2013 Act. On receipt of an application from the CG or from any person, if the Tribunal is of the opinion that the Scheme should be considered as per procedure laid down in Section 232 of the 2013 Act, it may direct accordingly or it may confirm the Scheme by passing such order as it deems fit.
if the CG does not have any objection to the Scheme or it does not file any application before the Tribunal, it shall be deemed that it has no objection to the Scheme.
Filing of order with the ROC


The confirmation order of the CG or the order of the Tribunal, as the case be, is filed by each of the companies, with the jurisdictional ROC


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