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Executing a Merger or Acquisition is tedious and complex in nature, especially if it relates to small companies. To deal with this conundrum, the Ministry of Corporate Affairs introduced fast-track mergers on December 15, 2016, and have been provided under section 233 of Companies Act, 2013 read with Rule 25 of the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016. In this article, we shall discuss fast track mergers and amalgamation.
Table of Contents
Section 233 of the Companies Act, 2013 introduced the concept of Fast Track Merger Process, which provides a more straightforward procedure for mergers and amalgamations of certain classes of companies like small companies, holding and subsidiary companies.
As per this process, it allows these companies to undergo merger and amalgamation procedures easily, quickly and within the time duration fixed. The Companies Act, 2013[1] notifies that it applies to all sorts of compromise and arrangements that include these companies.
When compared with the traditional mergers process, the new Act has made the procedure simple as it doesn’t further involve judicial process as concerned with the National Company Law Tribunal. Moreover, the companies are now required to take an approval from just three regulatory authorities, namely- Regional Directors, the Registrar of Companies & Official Liquidator.
As per Section 233(1) of Companies Act, 2013, the scheme of merger/amalgamation under the said provisions can be entered into between the following:
It is worth mentioning here that these class of companies would also be eligible for out of Court/Tribunal process of compromise or arrangement as per Section 233(12) of the Companies Act 2013. Such compromise or arrangement may be:
The procedure can be summarized as below:
With fast track mergers and amalgamations, companies have been able to undergo merger and amalgamation procedures easily, quickly and within the time duration fixed. Companies are now required to take an approval from Regional Directors, the Registrar of Companies and Official Liquidator.
Read our article:Companies (Compromise Arrangements & Amalgamations) Amendment Rules 2020
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