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Procedures for compromises,arrangements and amalgamation under

companies act 2013
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Compromise, Arrangement and Amalgamation in Company Law

Compromise, Arrangement and Amalgamation in Company Law
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Merger And Amalgamation Under The Companies Act,2013

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Nowadays mergers and amalgamations in India are increasing rapidly due to
continuous changes in dynamics, increasing competition, technology adaptation,
business expansion, and globalization of companies, etc.

Amalgamation and merger are used as single expressions. But in terms of

company law, they are different from each other. The Companies Act 2013 (Act
2013) enacted and replaced the 1956 Act with several amendments, including
those relating to mergers and acquisitions (M&A). The new bill has been
praised by unions for features such as business-friendly regulation, improved
reporting standards, and protection for investors and investors.

Recognizing the rights of business owners brings the law one step closer to
regulating individual businesses. The 2013 Act aims to simplify the entire
acquisition, merger, and restructuring process and facilitate local and cross-
border mergers and acquisitions, thus making Indian companies more profitable
for private investors.

Meaning Of Amalgamation
1.Amalgamation is the blending of two or more undertakings (companies) into
one undertaking, the shareholders of each blending company substantially
become the shareholders of the other company which holds blended ENTITY

2.An amalgamation happens when two or more companies combine to form a

completely new entity. This process is a distinct form of a merger in which
neither company that is involved survives as a legal entity and a completely new
brand or legal entity is formed. This new entity houses have the combined assets
and liabilities of both the involved companies. undertakings.
The fact that neither entity survives in an amalgamation is what sets it apart
from a merge or an acquisition as in those cases at least one of the companies or
organisations involved stays intact in the market. When an amalgamation takes
place, all the employees and shareholders of the involved companies may still
retain their positions but in the new organisation that has been formed.

3.During an amalgamation, the transferor company is absorbed by the stronger

transferee company which then leads to the formation of a completely new
company with more assets and a stronger customer base. The process of
amalgamation helps to increase the cash resources, eliminate competition and
save companies on taxes. But it can also have a negative effect where if too
much competition is cut out, it can lead to a monopoly and the workforce might
get scaled down which will increase the debt load of the new
entity/organisation.
4. Amalgamation usually takes place between companies who are in the same
line of business or the ones that share some similarities in their operations. Such
companies often decide to go through the process of amalgamation and combine
to form a totally new identity in order to diversify their activities and expand
their reach in the market. The new entity formed after the amalgamation takes
place is obviously larger than the involved companies because it is a
combination of them with all their assets, resources as well as liabilities
Regulatory
The terms of the amalgamation are finalised by the board of directors of the
involved companies. After this the detailed plan is prepared and submitted to the
High court and the Securities and Exchange Board of India (SEBI). These
authorities need to approve the submitted plan and the shareholders of the new
company for the process to go further
Regulation of Combinations (Section 5 & 6) of competition act 2002
Combination refers to merger or amalgamation amongst enterprises, or
acquisition of control, shares, voting rights or assets of an enterprise by another
person, provided (i) the financial threshold specified in the Section 5 of the Act
are satisfied the entity created as a result of amalgamation havebassets of value
more than 1000 croew or turn over more than 3000 croee; and (ii) merger,
amalgamation and acquisition are not covered under any of exemption
notification. Any person or enterprise, which proposes to enter into a
combination, is required to give notice to the Commission under Section 6(2) of
the Act any time prior to consummation of the same. However, categories of
combinations mentioned in schedule l of Combination Regulation are ordinarily
not likely to cause an appreciable adverse effect on competition in India,
therefore notice under sub-section (2) of section 6 of the Act need not normally
be filed, in respect thereof. If a combination causes or is likely to cause an
appreciable adverse effect on competition within the relevant market in India,
it can be modified/prohibited by the Commission
Types of Amalgamation
Amalgamation in the Nature of a Merger
The stronger transferee company absorbs the transferor (weaker)company,
pooling shareholders' interests, assets, and liabilities.The combined businesses
operate as a single new entity, and eligible shareholders of the transferor may
become shareholders in the new entity.
Amalgamation in the Nature of a Purchase
If the shareholders of the transferor company fail to meet the minimum
requirements and conditions, then they cannot retain their position in the new
entity and the amalgamation process takes place like a purchase which is made
by the stronger transferee company wherein only the shareholders of the
transferee company become shareholders in the new entity.
Pros and Cons of Amalgamation
Pros
Improved Competitiveness: Combines resources and strengthens the market
position.Tax Savings: Offers opportunities for tax benefits.
Market Reach and Diversification: Expands operations and customer base.
Economies of Scale: Potentially increases efficiency and shareholder value.
  here is no longer any competition between the companies
 The number of R&D facilities has risen
 It is possible to lower operating costs
 The price stability of items is preserved

Cons or Disadvanges
Monopoly Risks: Could create monopolistic tendencies and increase debt.
Amalgamation could result in the abolition of healthy competition
job Losses: May lead to layoffs due to redundancy or restructuring.

Effect Of Amalgamation
The true effect of and character of amalgamation largely depends on the scheme
of the merger. But, when two companies amalgamate and merge into one, the
transferor company loses its entity as it ceases to have its business. However,
their respective rights and liabilities are determined under the scheme of
amalgamation- Saraswati Industrial Syndicate Ltd. v. CIT [1991] 70 Comp. Cas.
184 (SC).
When the transferee-company takes over a property subject to charge, from the
transferor-company, the transferee-company has to file the necessary form with
R.O.C. for registration of charge in its name.
Examples of Amalgamation of Companies
Maruti Suzuki (India) Limited was formed when Maruti Motors in India and
Suzuki in Japan merged to create a new firm called Maruti Suzuki (India)
Limited
Gujarat Gas Ltd (GGL) is the result of the merger of Gujarat Gas Company Ltd
(GGCL) and Gujarat State Power Corporation Gas (GSPC Gas)
Satyam Computers and Tech Mahindra Ltd

Meaning Of Merger
Merger is a form of amalgamation where all the assets and liabilities of a
transferor company get merged with the assets and liabilities of the transferee
company leaving behind nothing for the transferee company except, its name
which gets removed through the process of law.

In reality, companies don't merge, only their assets and liabilities merge [1].
Mergers in the Indian Context
A merger is the consolidation of two or more companies into a single entity,
where one company absorbs the other(s) or forms a new entity. In India,
mergers are governed by the Companies Act, 2013, primarily under Sections
230-240, which cover compromise, arrangement, reconstruction, and
amalgamation. They require approval from the Ministry of Corporate Affairs
(MCA) and oversight by the Competition Commission of India (CCI) to prevent
anti-competitive practices. For listed companies, SEBI ensures compliance with
regulations, and the Insolvency and Bankruptcy Code (IBC) applies to mergers
involving insolvent companies. During a merger, the stronger transferee
company absorbs the weaker transferor company, transferring all assets,
liabilities, and operations to the surviving entity. Shareholders of the transferor
company typically receive shares of the transferee company based on a swap
ratio, though in some cases, they may be compensated otherwise.

Effects of Mergers
Mergers improve operational efficiency by leveraging synergies, reducing costs,
and enhancing market power through wider geographical reach and an
expanded customer base. However, challenges like cultural integration and
potential employee redundancies can arise. While shareholders often benefit
from increased value, employees may face job losses if their roles overlap.
Additionally, mergers may lead to monopoly concerns, impacting competition
and consumer prices.

Examples of Mergers in India

Several prominent mergers in India have shaped the business landscape. The
SBI and Associate Banks merger (2017) created a stronger banking entity. The
HDFC Bank and HDFC Ltd. merger (2022) consolidated banking and financial
services under one roof. Similarly, the Vodafone India and Idea Cellular merger
(2018) formed Vodafone Idea Limited to compete in the telecom sector. The
ONGC and HPCL merger (2018) integrated upstream and downstream energy
operations, enhancing vertical integration.
Advantages of Mergers
Mergers bring numerous benefits, including economies of scale through
resource optimization, broader market reach, and enhanced access to
technology. They often increase shareholder value through better financial
performance and operational efficiencies, allowing companies to remain
competitive and sustainable in the long term.

Disadvantages of Mergers
Despite the advantages, mergers have drawbacks. Cultural differences between
merging companies can create integration challenges, while high costs of legal,
administrative, and operational adjustments can strain resources. Monopoly
concerns may arise, reducing competition and potentially increasing consumer
costs. Moreover, mergers often result in employee layoffs due to role
redundancies, affecting job security.

In conclusion, mergers in India are pivotal for creating competitive, efficient,

and scalable organizations, though they require meticulous planning and
regulatory compliance to maximize their benefits and minimize potential
drawbacks.

Causes Of Merger And Amalgamation

The reasons why companies choose merger and amalgamation in India are:

 For economies of scale.

 For the increasing market share of companies.
 For reducing competition.
 For increasing shareholder value.
 For diversifying risk.
 For minimizing tax liabilities.
 For developing a brand name.
Types Of Merger In India
Following are the types of mergers in India:
Horizontal merger: a horizontal merger takes place between companies dealing
with similar products. The purpose of such a merger is to reduce competition,
acquire a dominant market position and expand market reach. Example: the
merger of Brooke Bond and Lipton India, Hindustan Unilever, and Patanjali.

Vertical merger: the main aim of a vertical merger is to combine companies that
deal with the same type of product. However, the stage of production at which
they operate is different.

Example: the merger of Reliance Industries and FLAG telecom group

Concentric merger: the term co-centric merger means that the organization
serves the same type of customers. Example: Axis Bank acquiring free charge.

Conglomerate merger: when two or more unrelated industries or companies

merge with each other It is termed a conglomerate merger. Example: Voltas
Limited and L&T merger.

Cash merger: when the shareholders are offered cash in place of the shares of a
newly formed company it is called a cash merger.

Forward merger: when a company chooses to merge with its customers, it is

called a forward merger.

Reverse Merger
A reverse merger is the opposite of a merger no clear definition has been given
in the companies act nor the term has been precisely defined by the Indian
court.

The reverse merger represents a case where the loss-making company or less
profit-earning company extends its embracing arm to the profitable company
and in turn, absorbs in its fold. The lost-making company is called a shell
company.

Features of Reverse merger/test of Reverse merger:

The Gujarat High Court has given the following test to be satisfied before an
arrangement can be termed as a reverse merger in the case of Bihari Mills Ltd,
In re, Maneklal Harilal Spg & Mfg. Co Ltd[2]

If the value of the assets of the healthy company exceeds the value of the loss-
making company or less profit-making company.

If the net profit attributable to the assets of the healthy company exceeds those
of the loss-making company or less profit-making company.

If the aggregate value of the consideration being issued by the loss-making or

less profit-making company exceeds the healthy company's value of the net
asset.

If the equity capital of the less profit-making company for an acquisition

exceeds its amount of equity share capital prior to acquisition.

If the issue of shares of the loss-making company would result in its change in
control through the introduction of minority holders or groups of holders.

Features of a shell company:

A shell company, for the purpose of this project, refers to a loss-making or a less
profit-making company.

A shell company for the purposes of a valid reverse merger may be:

i. a former operating company that is public or private, for some reason has
ceased operations and liquidated its assets; or
ii. one which never had any operations but was formed from scratch for the
specific purpose of creating a shell.
In the former situation, shell promoters gain control of defunct operating
companies by buying up a majority of their shares. In the latter situation, shell
promoters incubate the shells - they incorporate a company, under the
Companies Act. In Exchange for letting an operating company merge into a
shell, the promoter charges the operating company a fee and retains an
ownership interest in the shell post-merge.
Procedure Of Merger And Amalgamation
The Companies (Compromises, Arrangements, and Amalgamation) Rules,
2016, lay down the following procedure for filling petition under Section
230/232:

Application for order of meeting:

An application for compromise or arrangement by the creditors and
shareholders under section 230 of the act may be made to the National
Company Law Tribunal for convincing creditors meeting or shareholder
meeting in the prescribed form (Form No. NCLT-1). The application needed to
be a company by a notice of admission (Form No. NCLT-2) an affidavit (Form
No. NCLT-6) and a copy of the schedule for compromise and arrangement.

Hearing of application by the tribunal:

At the hearing, the tribunal determines the class for the classes of creditors who
are to attend the meeting to discuss the proposed compromise and arrangement,
fixing the date and time of such meeting, appointing a chairman, determining
the quorum and procedure of such meeting.

Notice of meeting:
Once that tribunal sees the application it issues notice for the conveyance of a
meeting of the creditors and the members of the company within 21 days. An
annexure with the notice is to be attached specifying details of the compromise
or arrangement, a copy of the valuation report, etc. Notice shall also be sent to
the central government, income tax authorities, respective stock exchange
sectoral regulators or authorities, etc. Representation by the above authorities
should be made within 30 days of receipt of the notice. In case of no response
within the stipulated time, it shall be presumed that they have no representation
to make on the proposals.

Voting and Proxies:

The notice shall also specify the person to whom the notice is sent may vote in
the meeting either themselves or through proxies or by postal ballot within 1
month of the date of receipt of the notice.
Filing of the petition:
If the scheme proposed for compromise and arrangement has been approved in
the meeting the company needs to present a petition (Form No. CAA 5) within 7
days after the chairman of the meeting submitted the report.

Hearing of the petition:

The tribunal shall hear the petition on the appointed day. The tribunal may grant
the scheme by an order (Form No. CAA. 6). The certified copy of the order
shall be filed with the ROC within 30 days of receipt of the same.

Application for a direction under section 232:

When the scheme concerning reconstruction and amalgamation of the company
and the mere sanction of the scheme by the tribunal is not sufficient to
implement it, an application may be filed with the tribunal for the direction with
regard to the same.

Role Of Tribunal
Any person aggrieved by any assessment of compensation made by the
prescribed authority under sub-section (3) may, within 30 days from the date of
publication of such assessment in the Official Gazette, prefer an appeal to the
Tribunal and thereupon the assessment of the compensation shall be made by
the Tribunal[Section 237(4)].

The Government, before making the order, must:

1. send a draft copy of the proposed order to each of the companies
concerned,
2. have considered and made such modifications in the draft order as may
seem to it desirable in the light of any suggestions and objections which
may be received by it from the companies concerned, or from
shareholders therein, or from any creditors thereof [Section 237(5)]. The
time for raising an objection, not less than two months from the date of
receipt of the copy of the draft order, shall be fixed by the Central
Government.
Copies of every order made under Section 237 must, after it has been made, be
laid before both Houses of Parliament as soon as possible [Section 237(6)]. The
provisions of Section 238 regarding disclosure and registration shall also apply
to the transfer of shares under Section 237.
Cases On Amalgamation And Merger
A scheme of amalgamation between a holding and its subsidiary company, not
involving any reorganization or restructuring of shares or any variation of
members' rights in the transferee company, does not need the sanction of the
High Court (now Tribunal) insofar as the transferee company is concerned -
Nebula Motors Ltd., In re (2003). [3]

Merely because a winding up petition is pending before the company court

(now Tribunal), the company cannot be barred from submitting a scheme of
arrangements to the court, even for avoiding winding up - Macho Foods (P.)
Ltd. v. Modiluft Ltd. (2003).[4]

Where the majority of creditors had no notice of the petition for amalgamation,
their interest should be protected and the petition for sanction of amalgamation
scheme should be dismissed - Kaveri Entertainment Ltd., In re (2003).[5] In this
case, the transferor company obtained the court's permission for the non-holding
of creditors' meetings on condition that it would issue notices to all creditors -
which it did only selectively i.e. only to some unsecured creditors.

Unless the exchange ratio and scheme are unconscionable or illegal or unfair or
unjust, the court (now Tribunal) would not act as a court of appeal and sit in
judgment. The court (now Tribunal), in the exercise of its jurisdiction, is to
satisfy that:

i. statutory provisions have been complied with

ii. the class of persons who attended the meeting was fairly represented
iii. the statutory majority was acting bona fide and
iv. the arrangement (Scheme) was such that an intelligent and honest man,
acting in respect of his interest might reasonably approve.

The concept of market value means the price that a willing purchaser will pay to
a willing seller for a property having due regard to its existing conditions with
all its advantages and potential possibilities - Reliance Petroleum Ltd., In re
(2003).[6] Also, see German Remedies Ltd., In re (2004)[7]
Reference:

 Areva T. and D. India Ltd., In re [2008] 81 SCL 140 (Cal.).

 Bihari Mills Ltd., In re, Maneklal Harilal Spg. & Mfg. Co. Ltd. [1985] 85
Comp. Cas. 6 (Guj.).
 Nebula Motors Ltd., In re [2003] 45 SCL 143 (AP).
 Macho Foods (P.) Ltd. v. Modiluft Ltd. [2003] 45 SCL 159 (Delhi).
 Kaveri Entertainment Ltd., In re [2003] 45 SCL 294 (Bom.).
 Reli- ance Petroleum Ltd., In re [2003] 46 SCL 38 (Guj.).
 German Remedies Ltd., In re [2004] 50 SCL 77 (Bom.).
 Taxmann's Company Law And-Practice By Dr. GK-Kapoor (24th-
Edition)

Compromise, Arrangement and Amalgamation in Company Law

 Corporate Law BlogsSubject-wise Law Notes
 Aishwarya Agrawal
 June 26, 2024

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Companies are constantly seeking ways to enhance their market presence,
achieve economies of scale and leverage growth synergies. One of the most
effective strategies employed by businesses globally is through compromise,
arrangement and amalgamation along with various other forms of corporate
restructuring. In the Indian context, the Companies Act, 2013, along with
various other regulatory frameworks, governs these intricate processes.
Contents hide
1. What is Compromise?
2. What is Arrangement?
3. What is Amalgamation?
4. Key Differences Between Compromise, Arrangement and Amalgamation
5. Governing Laws for Mergers and Amalgamations
6. Process of Implementing a Scheme of Compromise, Arrangement or
Amalgamation
7. Conclusion
What is Compromise?
The term ‘compromise’ has not been explicitly defined under the Companies
Act, 2013. However, in a general sense, it refers to the settlement of conflicts by
mutual consent or agreement. In the context of corporate restructuring, a
compromise often involves a scheme of arrangement between a company and
its creditors or shareholders to restructure its liabilities or equity.
Sections 230 to 232 of the Companies Act, 2013, provide the statutory
framework for compromises and arrangements. These sections outline the
procedures for proposing, approving and implementing such schemes. A
compromise typically involves an agreement where the company proposes to
modify the rights of its creditors or shareholders, which must be approved by
the National Company Law Tribunal (NCLT).
The primary purpose of a compromise is to facilitate the settlement of disputes
or financial reorganisation in a manner that is acceptable to all parties involved.
This can include restructuring debt, converting debt into equity or altering the
terms of existing obligations. By reaching a compromise, a company can avoid
insolvency proceedings, continue its operations and safeguard the interests of its
stakeholders.
What is Arrangement?
An arrangement, as defined under Section 230 of the Companies Act, 2013,
includes the reorganisation of a company’s share capital. This can be achieved
through the consolidation of shares of different classes, the division of shares
into various classes or a combination of both methods. An arrangement may
also encompass other forms of restructuring, such as mergers, demergers or the
transfer of assets and liabilities between companies.
Similar to compromises, arrangements are governed by Sections 230 to 232 of
the Companies Act, 2013. These sections outline the procedural requirements
for proposing and implementing an arrangement, including obtaining approvals
from the NCLT and conducting meetings with creditors and shareholders to
secure their consent.
The primary objective of an arrangement is to facilitate corporate restructuring
in a manner that enhances the operational efficiency and financial stability of
the company. By reorganising its share capital or undertaking other forms of
restructuring, a company can optimise its capital structure, improve its market
position and enhance shareholder value.
What is Amalgamation?
Amalgamation is the combination of two or more companies into a single new
entity. This process involves the transfer of assets and liabilities from the
merging companies to the newly formed entity. Unlike mergers, where one
company absorbs another, amalgamation results in the creation of a completely
new company that inherits the assets and liabilities of the amalgamating
companies.
The legal framework for amalgamations is provided under Section 2(1B) of the
Income Tax Act, 1961, which defines amalgamation as the merger of one or
more companies with another company or the merger of two or more companies
to form one company. Additionally, Sections 230 to 232 of the Companies Act,
2013, govern the procedural aspects of amalgamations, including the
requirement for NCLT approval and the conduct of meetings with creditors and
shareholders.
The primary purpose of amalgamation is to achieve corporate growth and
efficiency by combining the resources, operations and management of the
amalgamating companies. This can result in economies of scale, enhanced
market presence, reduced competition and increased shareholder value.
Amalgamations are often used to enter new markets, diversify product lines and
leverage synergies between the merging companies.
Key Differences Between Compromise, Arrangement and Amalgamation
While compromise, arrangement and amalgamation are all forms of corporate
restructuring, there are key differences between them:
1. Compromise involves an agreement between a company and its creditors
or shareholders to settle disputes or restructure liabilities.
 2. Arrangement refers to the reorganisation of a company’s share capital or
other forms of restructuring, including mergers and demergers.
3. Amalgamation involves the combination of two or more companies into
a single new entity, resulting in the transfer of assets and liabilities to the
new company.
Below is a table summarising the key differences between compromise,
arrangement and amalgamation:

Aspect Compromise Arrangement Amalgamation

Settlement of Reorganisation of a
Combination of two
disputes by mutual company’s share
Definition or more companies
consent or capital or other
into a new entity.
agreement. restructuring.
Section 2(1B) of the
Income Tax Act,
Sections 230-232 of Sections 230-232 of
Legal 1961; Sections 230-
the Companies Act, the Companies Act,
Basis 232 of the
2013. 2013.
Companies Act,
2013.
To achieve
To reorganise share
To resolve disputes corporate growth,
capital, improve
Purpose and restructure economies of scale
efficiency and
liabilities. and enhanced
restructure.
market presence.

Settlement between Reorganisation of Formation of a new

the company and its share capital or company, transfer
Outcome
creditors/shareholder other structural of assets and
s. changes. liabilities.

Generally between
Type of Involves the
the company and its Involves two or
Companie company’s internal
creditors/shareholder more companies.
s Involved restructuring.
s.

Approval by Approval by Approval by

Approval
creditors/shareholder creditors/shareholde creditors/shareholde
Required
s and NCLT. rs and NCLT. rs and NCLT.
 A new entity is
The original
The original created;
Resultant company continues
company continues amalgamating
Entity to exist, but with
to exist. companies lose their
restructured capital.
existence.

Two companies
Debt restructuring Share capital
merging to form a
agreement between a reorganisation by
Example new entity with
company and its consolidating shares
combined assets and
creditors. of different classes.
liabilities.

Governing Laws for Mergers and Amalgamations

Several laws govern the processes of compromise, arrangement and
amalgamation in India. These include:
1. Companies Act, 2013: Sections 230 to 232 of the Act provide the
statutory framework for compromises, arrangements and amalgamations,
outlining the procedural requirements and the role of the NCLT in
approving such schemes.
2. Companies (Compromise, Arrangement and Amalgamations) Rules,
2020: These rules provide additional procedural guidelines for
implementing schemes of compromise, arrangement and amalgamation.
3. Foreign Exchange Management Act, 1999: This Act regulates foreign
investment and cross-border mergers and amalgamations involving
Indian companies.
4. The Competition Act, 2002: This Act ensures that mergers and
amalgamations do not result in anti-competitive practices and require
approval from the Competition Commission of India (CCI) in certain
cases.
5. Income Tax Act, 1961: This Act provides tax implications and benefits
associated with mergers and amalgamations, including the definition of
amalgamation under Section 2(1B).
6. Insolvency and Bankruptcy Code, 2016: This Code provides a
framework for resolving insolvency and bankruptcy cases, including the
 restructuring of distressed companies through compromise, arrangement
or amalgamation.
7. Indian Stamp Duty Act, 1899: This Act imposes stamp duty on various
instruments, including those related to mergers and amalgamations.
8. SEBI (Substantial Acquisition of Shares and Takeover) Regulations,
2011: These regulations govern the acquisition of shares and control of
listed companies, including mergers and amalgamations involving listed
entities.
Process of Implementing a Scheme of Compromise, Arrangement or
Amalgamation
The implementation of a scheme of compromise, arrangement or amalgamation
involves several key steps:
1. Proposal of the Scheme: The company proposing the scheme prepares a
detailed plan outlining the terms and conditions of the compromise,
arrangement or amalgamation.
2. Approval by the Board of Directors: The board of directors of the
company approves the proposed scheme and authorises the management
to proceed with the necessary steps.
3. Application to the NCLT: The company files an application with the
NCLT seeking approval for the proposed scheme. The NCLT reviews the
application and may order the convening of meetings with creditors and
shareholders.
4. Meetings with Creditors and Shareholders: The company conducts
meetings with its creditors and shareholders to seek their approval for the
proposed scheme. The scheme must be approved by a majority in number
and three-fourths in value of the creditors or shareholders present and
voting at the meeting.
5. Sanction by the NCLT: Upon receiving the requisite approvals from
creditors and shareholders, the company files a petition with the NCLT
seeking its sanction for the scheme. The NCLT reviews the petition and,
if satisfied, sanctions the scheme, making it legally binding on all parties.
6. Filing with the Registrar of Companies: The company files the
sanctioned scheme with the Registrar of Companies, completing the legal
formalities for implementing the scheme.
Conclusion
Compromise, arrangement and amalgamation are essential tools in the corporate
restructuring, enabling companies to achieve growth, efficiency and financial
stability. Governed by a robust legal framework, these processes facilitate the
seamless reorganisation of corporate entities, ensuring the protection of
stakeholders’ interests and promoting economic development. As businesses
continue to navigate the complexities of the modern economic landscape, the
strategic use of compromise, arrangement and amalgamation will remain pivotal
in driving corporate success.