Compromise, Arrangement & Amalgamation
Compromise, Arrangement & Amalgamation
Compromise, Arrangement & Amalgamation
Tribunals Power
SECTION 232. MERGER AND
AMALGAMATION OF COMPANIES
Sub Section 6
Effective date of the scheme
The scheme under this section shall clearly indicate an
appointed date from which it shall be effective and the
scheme shall be deemed to be effective from such
date and not at a date subsequent to the appointed
date
Sub Section 7 Annual statement
certified by CA/CS/CWA to be filed with
registrar every year until the
completion of the scheme
Every company in relation to which the
order is made shall, until the completion of
the scheme, file a statement in such form
and within such time as may be prescribed
with the Registrar every year duly certified
by a chartered accountant or a cost
accountant or a company secretary in
practice indicating whether the scheme is
being complied with in accordance with the
orders of the Tribunal or not.
Penalty for Default
Default on the part of the transferor
company in complying with the
provisions make it liable to pay fine
not less than Rs. 1,00,000 extending
to 25,00,000.
Every officer in default is liable to
imprisonment upto 1 year or with
fine not less than Rs. 1,00,000
extendable to 3,00,000 or with both
Explanation appended to the
section
in a scheme involving a merger, where under the
scheme the undertaking, property and liabilities of
one or more companies, including the company in
respect of which the compromise or arrangement
is proposed, are to be transferred to another
existing company, it is a merger by absorption, or
where the undertaking, property and liabilities of
two or more companies, including the company in
respect of which the compromise or arrangement
is proposed, are to be transferred to a new
company, whether or not a public company, it is a
merger by formation of a new company;
references to merging companies are in relation to
a merger by absorption, to the transferor and
transferee companies, and, in relation to a merger
by formation of a new company, to the transferor
companies;
a scheme involves a division, where under the
scheme the undertaking, property and liabilities of
the company in respect of which the compromise
or arrangement is proposed are to be divided
among and transferred to two or more companies
each of which is either an existing company or a
new company;
property includes assets, rights and interests of
every description and liabilities include debts and
obligations of every description
Applicable Rules
Rule18. Application for directions under section 232
of the Act.
(1) Where the compromise or arrangement has been
proposed for the purposes of or in connection with a
scheme for the reconstruction of any company or
companies or the amalgamation of any two or more
companies, and the matters involved cannot be dealt with
or dealt with adequately on the petition for sanction of the
compromise or arrangement, an application shall be made
to the Tribunal under section 232 of the Act, by a notice of
admission supported by an affidavit for directions of the
Tribunal as to the proceedings to be taken.
(2) Notice of admission in such cases shall be given in such
manner and to such persons as the Tribunal may direct.
Rule 19. Directions at hearing of application. Upon
the hearing of the notice of admission given under
rule 18 or upon any adjourned hearing thereof, the
Tribunal may make such order or give such directions
as it may think fit, as to the proceedings to be taken
for the purpose of reconstruction or amalgamation,
as the case may be, including, where necessary, an
inquiry as to the creditors of the transferor company
and the securing of the debts and claims of any of
the dissenting creditors in such manner as the
Tribunal may think just and appropriate
Rule 20. Order under section 232 of the Act. An
order made under section 232 read with section 230
of the Act shall be inForm No.CAA.7 with such
variation as the circumstances may require
Rule 21. Statement of compliance in mergers and
amalgamations. For the purpose of sub-section (7) of section
232 of the Act, every company in relation to which an order is
made under sub-section (3) of section 232 of the Act shall until
the scheme is fully implemented, file with the Registrar of
Companies, the statement in Form No. CAA.8 along with such fee
as specified in the Companies (Registration Offices and Fees)
Rules, 2014 within two hundred and ten days from the end of
each financial year.