Divorce Notice

To improve the value production, business share and cost-efficiency of businesses, companies often lead to mergers and acquisitions. Generally, Mergers and Acquisitions have manifold advantages and have proven their usefulness in numerous complicated situations in the past. But, the Companies Act, 2013 of India involved separate provisions and tedious procedures to deal with them, which also required approval from many regulatory bodies as well as Central Government and direction. In consideration to same, there was a sincere demand for years to both simplify as well as expedite the procedure of mergers, amalgamations and acquisitions. On 15th December 2016, the Ministry of Corporate Affairs (MCA) notified a novel and a welcome concept of ‘Fast Track Merger’ by introducing Section 233 of Companies Act, 2013.

What is the ‘fast track merger process?

Section 233 of the Companies Act, 2013 introduces the globally affirmed idea of ‘Fast Track Merger Process’ which proposes an insignificantly more manageable system for organisations of certain aspects of businesses including small businesses, subsidiary corporations. Under this method, it allows these businesses to support merger suddenly, directly and within the solidified period. The Companies Act, 2013 reveals that it applies to all sorts of accommodation and systems that include these organisations.

What are the relevant prerequisites of the Fast Track Merger Method?

The key relevant prerequisites of the fast track merger means are described here:

That Merger & Amalgamation (M & A) may be inserted between 2 or more small businesses having paid-up capital less than Rs.5 million and turnover shorter than Rs.20 Million.

That Merger & Amalgamation may be inserted among other groups or types of organisations as may be appointed.

The following organisations presented below are prohibited from the fast track merger manner:

Other public companies’

Section 8 Companies under the act

Companies regulated under the special act

The draft project needs the permission of:-

Board of Directors of both the companies.

90% of shareholders (in number) and 90% of creditors (in value).

Central Government ( power delegated to Regional Director)

Mandatory requirements

The following are the mandatory requirements

The scheme must be registered with the Jurisdictional Registrar of Companies (ROC) as well as the official liquidator.

Meeting a conference of divisions and lessors to receive the support. The creditor’s agreement can be evaded if they immediately present their approval in reporting.