Information, communication, entertainment. Know the difference between Slump Sale and Demerger procedure to be followed, companies act 2013, business transfer agreement, income tax. Legal aspect of Merger/Amalgamation. memorandum of association of the companies seeking to merge Merger and amalgamation of companies → Section i.e., Compromise, Arrangements, Reconstruction, Amalgamation & Mergers. E-Voting was not permitted under 1956 Act. On 7th November, 2016 Central Government issued a notification for enforcement of section 230-233, 235-240, 270-288 etc pertaining to proceedings relating to arbitration, compromise, arrangements and reconstruction of companies … It is sometimes ideal to have both on the same date from commercial angle particularly in the case of demerger. It is a legal process by which two or more companies are joined together to form a new entity or one or more companies are absorbed by another company and as a consequence the … Likewise, every merger also has an 'Effective Date'. There are specific provisions incorporated under Act for completion of Company Mergers without following detail procedures otherwise laid down under Section 230 and 232 of the Act. Both the transferor and the transferee company shall make an application in the form of petition to the Tribunal under section 230-232 of the Companies Act, 2013 for the puspose of sanctioning the scheme of amalgamation. Mergers, Take-over of Companies The Companies Act, 2013 contains provisions relating to various methods of reorganisation of companies under Sections 230 to 240 of the Act. However, Section 2(1B) of the Income Tax Act, 1961 widely explains the term amalgamation by clearly stating the conditions, under which a merger could qualify as an amalgamation. Merger is a process of combining two business entities into one. “Merger and Amalgamation: ... As these two terms are not defined under the Companies Act, 2013, there is not much difference between these two words they are used interchangeably in most cases yet in strict senses few differences can be pointed out such as the merger is commonly used for the fusion of two companies. MERGER AND AMALGAMATION UNDER COMPANIES ACT: Section relating to merger and amalgamation under companies act , 2013 are 230 and 232. are notified under the Companies Act, 2013. 21. There is no expressed definition of amalgamation in the Act. There are two types of Cross border mergers – Inbound Merger and Outbound Merger. Certain business combinations such as mergers and amalgamations are dealt with under Chapter XV-Compromises, Arrangements and Amalgamations of the Companies Act, 2013 (2013 Act). Amalgamation is a type of Merger in which two or more business entities decides to join and form a new company. (14) A company covered under this section may use the provisions of section 232 for the approval of any scheme for merger or amalgamation. As per law, the word “amalgamation” or “merger” is not defined in the companies Act, 2013. Though, the word “merger and amalgamation” is used and section 232 of the Act talks about the merger and amalgamation of companies. However, Section 2 (1B) of the Income tax Act, 1961 defines “Amalgamation” FAST TRACK MERGER (FTM) Section 233 of Companies Act, 2013 – Merger or Amalgamation of certain companies {Rule 25 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016} [Effective from 15th December, 2016] Fast Track Merger (FTM) is a new concept introduced under the Companies Act, 2013. SECTION 232. The difference between Section 394 and Clause 232 is that, in Clause 232, an attempt has been made to codify separately, the complete procedure for amalgamation and demerger of companies. Merger through holding company; Merger for revival and rehabilitation. Difference Between Merger & Amalgamation (M&A) and Private Equity Buyouts P rocedure For Merger and Amalgamation Under Companies Act 2013 1. Let us analyse the legal provisions under the Companies Act 2013: In this article, we try to unveil the various aspects and implications of the same under various laws. The following is the prescribed procedure for Mergers and Amalgamations under Companies Act, 2013. Power to undergo amalgamation: Most importantly, it must be ensured that the companies undergoing the amalgamation have the power in the object clause of their Memorandum of Association to undergo such amalgamation. Banking and insurance. (13) The Central Government may provide for the merger or amalgamation of companies in such manner as may be prescribed. Clause 232 opens with the provision that where an application is made to the Tribunal under Clause 230 and if it pertains to – Proposed in the scheme of Merger & Amalgamation ( C&A) is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013; and Such other information or documents as the Board or Management believes necessary and relevant for making decision for or against the scheme; Mergers and Amalgamations The term ‘merger’ is not defined under the Companies Act, 2013 (“CA 2013”) or under Income Tax Act, 1961 (“ITA”). Amalgamation is a common strategy by companies for varying purposes such as: 1. ‘Cross border merger’ means any merger, amalgamation or arrangement between an Indian Company and Foreign Company, in accordance with Companies (Compromises, Arrangements, and Amalgamations ) Rules, 2016 notified under the Companies Act, 2013. Section 233 of the Act read with Rule 25 of the Companies , Arrangements & Amalgamation Rules, 2016 deals with fast track Mergers . Financial reporting. 12 December 2016. Regulatory and other information. Under the Old Act, mergers/amalgamations between group companies and subsidiaries are placed on the same pedestal on which mergers/amalgamations between entirely unrelated companies are placed. Procedure to be followed for merger or amalgamation of two or more small companies or between a holding company and its wholly owned subsidiary company or such other class or classes of companies as may be prescribed under section 233 of CA, 20133 (Fast track merger… Exemption from court process Companies Act 2013 Companies Act 1956 Option to following companies to undertake corporate reorganizations like amalgamation, demerger, etc. (1) Where an is made to the under section 230 for the sanctioning of a compromise or an arrangement proposed between a and any such persons as are mentioned in that section, and it is shown to the — (a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme … Continue reading Section 232. The key points of difference between amalgamation and merger have been detailed below: 1. Section 234 – Merger or amalgamation of company with foreign company The provisions relating to merger and amalgamation are contained in sections 390 to 396A in Chapter V of Part VI of the Companies Act, 1956. This procedure is only permitted between a holding company and one or more of its wholly-owned subsidiaries, or between two or more wholly-own… First Notes on. In any scheme of Mergers or Demergers, the definition of Appointed date and Effective date play a very crucial role. The difference between both the dates are mentioned below: Section 231 explains the power of Tribunal to enforce compromise or arrangement. MERGER OR AMALGAMATION OF A COMPANY WITH FOREIGN COMPANY (SECTION 234):- • The provision of this chapter shall also apply to the scheme of mergers and amalgamations between companies registered under the Companies Act, 2013 and companies incorporated in the jurisdictions of such countries as may be notified. Merger can be either in the form of amalgamation above or may involve takeover of one or more target companies by an existing company. Both these dates are crucial in many respects, including, for purposes of the Income-Tax Act, 1961 and in particular the assessment of income of the two companies under that Income- Tax Act,1961. There are two forms of voluntary amalgamation procedures, the “short form” procedure and the procedure under sections 215B and 215C of the Act (often referred to in its abbreviated term, the “long form” procedure). First step in this process is to draft a scheme of compromise or arrangement for restructuring or amalgamation. A Merger or Amalgamation is an arrangement whereby the assets of two or more companies become vested in one company (which may or may not be one of the original two companies). A. Merger in public interest under the orders of Central Government. 3 Grant Thornton India, LLP, “Implications of Companies Act, 2013, Mergers and Amalgamations”. 6: Merger of a Listed Company … All. Mergers and amalgamations have been dealt widely under the Companies Act 2013. 3.) Section 230 deals with the power to make compromise and arrangement of companies. 1. Section 230-240 of the Companies Act, 2013 ("the Act") provide us with a mechanism where in a scheme of arrangement may be entered into between a company, its creditors or and its members. 2.) MERGER & AMALGMATION. A minimum of two companies are required, i.e. The terms merger and amalgamation are synonyms and the term ‘ amalgamation’, as per Concise Oxford Dictionary, Tenth Edition, means , ‘to combine or unite to form one organization or structure’. Merger. 431 Key Differences Between Amalgamation and Merger There is a very fine difference as both processes are a way to a consolidation of multiple companies. Sector. It is unique concept because High Court … The merger Disclosures. The mechanism envisages a mandatory approval3 4of the Tribunal which has replaced the High Court. The Companies Act, 2013 (2013 Act) has seen the light of day and replaced the 1956 Act with some sweeping changes including those in relation to mergers and acquisitions (M&A). Section 232 of the Companies Act, 2013 provides the provisions for amalgamation. Transferor and Transferee. Definition. Point of Difference. In India, the concept of Merger and Amalgamation is primarily governed by the regulations of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2020, and Section 230 to 234 of the Companies Act, 2013. However, the following key legislation also regulate the activities of Merger and Amalgamation in India: INTRODUCTION. With the notification of the relevant sections dealing with compromises, arrangements and ... • Goodwill is measured as the difference between Under the Companies Act 2013, the concept of merger & amalgamation is fully explained whereas under Companies Act 1956, the term ‘merger’ is not defined and also under the Income Tax Act, 1961. Amalgamation involves combining of two or more existing companies to form a new company. Short form amalgamations are available solely for companies within the same corporate group and where there are no minority interests. Proposed scheme of Merger & Amalgamation is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013. Such other necessary information or document relevant to making a decision in favor or against the scheme. Thus, the changes introduced under the 2013 Act are: In the case of members, objections can be raised only be persons holding not less than ten percent of the shareholding. IV. Corporate law updates. Meaning. MERGER AND AMALGAMATION OF COMPANIES [Effective from 15th December, 2016](1) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal— (a) that the compromise or arrangement has been … For the consultation, contact Huconsultancy (joint venture consulting services). Presently, the High Court enjoys powers of sanctioning merger or amalgamation matters under section 394 of the Companies Act, 1956 but once merger sections covered under the Companies Act, 2013 gets notified then this power of sanctioning merger or amalgamation will be exercised by the National Company Law Tribunal (NCLT). 2. Amalgamation of companies means combining two or more companies and creating a new entity from it.

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