{"id":1446,"date":"2021-03-27T08:56:24","date_gmt":"2021-03-27T08:56:24","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=1446"},"modified":"2021-03-27T08:56:46","modified_gmt":"2021-03-27T08:56:46","slug":"fast-track-mergers","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/fast-track-mergers\/","title":{"rendered":"Fast Track Mergers"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"683\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/mergers-and-acquisitions-1024x683.jpg\" alt=\"\" class=\"wp-image-1448\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/mergers-and-acquisitions-1024x683.jpg 1024w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/mergers-and-acquisitions-300x200.jpg 300w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/mergers-and-acquisitions-768x512.jpg 768w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/mergers-and-acquisitions.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Mergers and amalgamations are the processes of amalgamation of two or more entities\/companies through inorganic means.It is a time-consuming process for all companies irrespective of their size, net worth, and turnover.This procedure wascomplex and timetaking for all stakeholders involved in the process.The process involves:-<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Drafting a merger scheme<\/li><li>Taking judicial approval for the scheme<\/li><li>Getting Board and shareholders authorization, etc.<\/li><\/ul>\n\n\n\n<p>which defeats the purpose for which mergers were entered into and discourages the companies who are looking for collaborations.<\/p>\n\n\n\n<p><strong><u>Legal Regime behind Fast Track Mergers<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The concept of fast-track mergers has been introduced under Section 233 of the Companies Act, 2013.<\/li><li>It provides an exemption from the regular merger procedure.<\/li><li>It exempted small companies, holding and subsidiary companies, and other companies <strong><em><u>as may be prescribed by CG,<\/u><\/em><\/strong> entering into merger arrangements from the regular merger procedure as stipulated under sections 230-232 of the Companies Act, 2013.<\/li><\/ul>\n\n\n\n<p>Following are the benefits that a fast-track merger can provide within Section 233 of the Companies Act:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Clarified and simple procedure for merger<\/li><li>No requirement of judicial approval<\/li><li>Different procedures for a certain company which will enable them to expand without any obstructions.<\/li><li>Form filings required also considerably reduced<\/li><li>Comparably less cost<\/li><\/ul>\n\n\n\n<p><strong><u>Section 233: Merger or Amalgamation of certain specific companies<\/u><\/strong><\/p>\n\n\n\n<p><strong><u>Applicability<\/u><\/strong><strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>small companies,<\/li><li>holding and wholly-owned subsidiary,<\/li><li>other companies as may be <strong><em><u>prescribed by CG<\/u><\/em><\/strong><\/li><\/ul>\n\n\n\n<p><strong><em><u>Note:prescribed by CG<\/u><\/em><\/strong><\/p>\n\n\n\n<p>A scheme of merger or amalgamation under section 233 may be entered into between any of the following companies:-<\/p>\n\n\n\n<p>(i) 2 or more start-up companies; or<\/p>\n\n\n\n<p>(ii) 1 or more start-up companies with one or more small companies.<\/p>\n\n\n\n<p><strong>Fast Track merger not applicable on:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>subsidiary company or a holding company.<\/li><li>Non-profit organizations as per section 8; or<\/li><li>company or body corporate governed by any specialAct.<\/li><\/ul>\n\n\n\n<p><strong><u>STEPWISE PROCEDURE:<\/u><\/strong><\/p>\n\n\n\n<p><strong>Step 1<\/strong><strong>:<\/strong>Both the companies should be duly authorized by their Article of Association. If not, then both the companies have to alter their Article of Association.<strong><\/strong><\/p>\n\n\n\n<p><strong>Step 2<\/strong><strong>:<\/strong>Board meeting is to be conducted to approve the draft scheme of merger or amalgamation bypassing board resolution by both companies<\/p>\n\n\n\n<p><strong>Step 3<\/strong><strong>:<\/strong>Once the scheme is approved in the board meeting both the companies will file theproposed scheme {in from CAA-9 is to be filed in Form GNL-1} to<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>ROC (both the roc where the registered office of transferor and transferee is situated)<\/li><li>Official liquidator<\/li><li>A person affected by the scheme.<\/li><\/ul>\n\n\n\n<p><strong>Step 4<\/strong><strong>:<\/strong>ROC, Official liquidator, or person affected by the scheme will forward its objection or comments to RD and Companieswithin 30 days from the date of the notice.<strong><\/strong><\/p>\n\n\n\n<p><strong>Step 5<\/strong><strong>:<\/strong>Both transferor and transferee company shall file a declaration of solvency withROC in Form CAA-10 in form GNL-2.<strong><\/strong><\/p>\n\n\n\n<p><strong>Step 6<\/strong><strong>:<\/strong>Both the companies will take the approval of members (holding atleast 90% of the total no. of share of the scheme) and the members will also consider the objection or comments received. <strong><\/strong><\/p>\n\n\n\n<p><strong>Step 7<\/strong><strong>:<\/strong>In GM scheme shall be approved by<strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Members holding at least 90% of the value of shares.<\/li><li>Creditors holding at least 90% of the outstanding debt.<\/li><\/ul>\n\n\n\n<p>and if a meeting is not conducted then the scheme to be approved in writing by the majority representing the creditor of respective companies.<\/p>\n\n\n\n<p>Both the companies will file Form MGT-14 with ROC as and when the special resolution is approved.<\/p>\n\n\n\n<p><strong>Step 8<\/strong><strong>:<\/strong>Within 7 days, Transferee Company shall file the scheme with the Regional Directorin Form CAA-11 with the following documents:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Copy of scheme as proved by members and creditor<\/li><li>Result of each of the meetings.<\/li><\/ul>\n\n\n\n<p><strong>Step 9<\/strong><strong>:<\/strong>Copy of scheme shall be filed to<strong><\/strong><\/p>\n\n\n\n<p>Mergers and amalgamations are the processes of amalgamation of two or more entities\/companies through inorganic means.It is a time-consuming process for all companies irrespective of their size, net worth, and turnover.This procedure wascomplex and timetaking for all stakeholders involved in the process.The process involves:-<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Drafting a merger scheme<\/li><li>Taking judicial approval for the scheme<\/li><li>Getting Board and shareholders authorization, etc.<\/li><\/ul>\n\n\n\n<p>which defeats the purpose for which mergers were entered into and discourages the companies who are looking for collaborations.<\/p>\n\n\n\n<p><strong><u>Legal Regime behind Fast Track Mergers<\/u><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The concept of fast-track mergers has been introduced under Section 233 of the Companies Act, 2013.<\/li><li>It provides an exemption from the regular merger procedure.<\/li><li>It exempted small companies, holding and subsidiary companies, and other companies <strong><em><u>as may be prescribed by CG,<\/u><\/em><\/strong> entering into merger arrangements from the regular merger procedure as stipulated under sections 230-232 of the Companies Act, 2013.<\/li><\/ul>\n\n\n\n<p>Following are the benefits that a fast-track merger can provide within Section 233 of the Companies Act:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Clarified and simple procedure for merger<\/li><li>No requirement of judicial approval<\/li><li>Different procedures for a certain company which will enable them to expand without any obstructions.<\/li><li>Form filings required also considerably reduced<\/li><li>Comparably less cost<\/li><\/ul>\n\n\n\n<p><strong><u>Section 233: Merger or Amalgamation of certain specific companies<\/u><\/strong><\/p>\n\n\n\n<p><strong><u>Applicability<\/u><\/strong><strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>small companies,<\/li><li>holding and wholly-owned subsidiary,<\/li><li>other companies as may be <strong><em><u>prescribed by CG<\/u><\/em><\/strong><\/li><\/ul>\n\n\n\n<p><strong><em><u>Note:prescribed by CG<\/u><\/em><\/strong><\/p>\n\n\n\n<p>A scheme of merger or amalgamation under section 233 may be entered into between any of the following companies:-<\/p>\n\n\n\n<p>(i) 2 or more start-up companies; or<\/p>\n\n\n\n<p>(ii) 1 or more start-up companies with one or more small companies.<\/p>\n\n\n\n<p><strong>Fast Track merger not applicable on:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>subsidiary company or a holding company.<\/li><li>Non-profit organizations as per section 8; or<\/li><li>company or body corporate governed by any specialAct.<\/li><\/ul>\n\n\n\n<p><strong><u>STEPWISE PROCEDURE:<\/u><\/strong><\/p>\n\n\n\n<p><strong>Step 1<\/strong><strong>:<\/strong>Both the companies should be duly authorized by their Article of Association. If not, then both the companies have to alter their Article of Association.<strong><\/strong><\/p>\n\n\n\n<p><strong>Step 2<\/strong><strong>:<\/strong>Board meeting is to be conducted to approve the draft scheme of merger or amalgamation bypassing board resolution by both companies<\/p>\n\n\n\n<p><strong>Step 3<\/strong><strong>:<\/strong>Once the scheme is approved in the board meeting both the companies will file theproposed scheme {in from CAA-9 is to be filed in Form GNL-1} to<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>ROC (both the roc where the registered office of transferor and transferee is situated)<\/li><li>Official liquidator<\/li><li>A person affected by the scheme.<\/li><\/ul>\n\n\n\n<p><strong>Step 4<\/strong><strong>:<\/strong>ROC, Official liquidator, or person affected by the scheme will forward its objection or comments to RD and Companieswithin 30 days from the date of the notice.<strong><\/strong><\/p>\n\n\n\n<p><strong>Step 5<\/strong><strong>:<\/strong>Both transferor and transferee company shall file a declaration of solvency withROC in Form CAA-10 in form GNL-2.<strong><\/strong><\/p>\n\n\n\n<p><strong>Step 6<\/strong><strong>:<\/strong>Both the companies will take the approval of members (holding atleast 90% of the total no. of share of the scheme) and the members will also consider the objection or comments received. <strong><\/strong><\/p>\n\n\n\n<p><strong>Step 7<\/strong><strong>:<\/strong>In GM scheme shall be approved by<strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Members holding at least 90% of the value of shares.<\/li><li>Creditors holding at least 90% of the outstanding debt.<\/li><\/ul>\n\n\n\n<p>and if a meeting is not conducted then the scheme to be approved in writing by the majority representing the creditor of respective companies.<\/p>\n\n\n\n<p>Both the companies will file Form MGT-14 with ROC as and when the special resolution is approved.<\/p>\n\n\n\n<p><strong>Step 8<\/strong><strong>:<\/strong>Within 7 days, Transferee Company shall file the scheme with the Regional Directorin Form CAA-11 with the following documents:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Copy of scheme as proved by members and creditor<\/li><li>Result of each of the meetings.<\/li><\/ul>\n\n\n\n<p><strong>Step 9<\/strong><strong>:<\/strong>Copy of scheme shall be filed to<strong><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>ROC in Form GNL-1<\/li><li>Official liquidator<\/li><\/ul>\n\n\n\n<p><strong>Step 10:Approval of Scheme<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"493\" height=\"525\" src=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/image-10.png\" alt=\"\" class=\"wp-image-1447\" srcset=\"https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/image-10.png 493w, https:\/\/www.akgvg.com\/blog\/wp-content\/uploads\/2021\/03\/image-10-282x300.png 282w\" sizes=\"auto, (max-width: 493px) 100vw, 493px\" \/><\/figure>\n\n\n\n<p><strong>Then within 30 days,the company shall file the scheme to ROC in Form INC-28.<\/strong><\/p>\n\n\n\n<p><strong>This content is meant for information only and should not be considered as an advice or legal opinion, or otherwise. <a href=\"https:\/\/www.akgvg.com\/\">AKGVG &amp; Associates <\/a>does not intend to advertise its services through this.<\/strong><\/p>\n\n\n\n<p>Posted by:<\/p>\n\n\n\n<p>CA Neetu Saini<\/p>\n\n\n\n<p>AKGVG &amp; Associates<strong><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mergers and amalgamations are the processes of amalgamation of two or more entities\/companies through inorganic means.It is a time-consuming process for all companies irrespective of their size, net worth, and turnover.This procedure wascomplex and timetaking for all stakeholders involved in the process.The process involves:- Drafting a merger scheme Taking judicial approval for the scheme Getting&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1448,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[471],"class_list":["post-1446","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-direct-tax","tag-fast-track-merger"],"_links":{"self":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/1446","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/comments?post=1446"}],"version-history":[{"count":1,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/1446\/revisions"}],"predecessor-version":[{"id":1449,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/posts\/1446\/revisions\/1449"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media\/1448"}],"wp:attachment":[{"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/media?parent=1446"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/categories?post=1446"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.akgvg.com\/blog\/wp-json\/wp\/v2\/tags?post=1446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}