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Definitions
• Meaning of Merger
• Merger is an absorption of one or more
companies by a single existing company.
• There a...
• Meaning of Amalgamation:
• "Amalgamation is a union of two or more
companies, made with an intention to form a
new compa...
MERGER AND AMALGAMATION
(SECTION 232):-
• The Tribunal, Merger, amalgamation or demerger
is proposed in the application of...
Notice of the Meeting:-
• The notice for a meeting called in pursuance of an order of
the Tribunal, shall be sent to all t...
• e) such other prescribed matters.
• In addition to the above, the companies merging
or demerging, shall also circulate –...
• A notice along with all the documents shall also be sent to –
• (a) The Central Government;
• (b) The Income – tax autho...
• (j) a supplementary accounting statement if the last
annual accounts of any of the merging company relate to
a financial...
Effect of the Scheme:-
• Where (i) majority of persons representing
three – fourth in value of the creditors or class
of c...
The Order:-
• The Tribunal may, by order, sanction the compromise or
arrangement or may make provision for the following m...
• company on date of transfer;
• (d) Dissolution, without winding – up, of any
transferor company;
• (e) The provision to ...
• The transferee company shall remain unlisted company until it become an
listed company;
• If shareholders of the transfe...
Filing with the Registrar:-
Every company in relation to which the order is
made shall cause a certified copy of the order...
• Annual Statement on Scheme:-
• Every company, in relation to which the order
is made, shall file a statement with the
Re...
Penalty:-
• If a transferor company or a transferee company
contravenes the provisions of this section, the
transferor com...
MERGER OR AMALGAMATION OF A COMPANY
WITH FOREIGN COMPANY (SECTION 234):-
• The provision of this chapter shall also apply ...
Merger and-amalgamation
Merger and-amalgamation
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Merger and-amalgamation

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merger and amalgamation and a detailed note on it...

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Merger and-amalgamation

  1. 1. Definitions • Meaning of Merger • Merger is an absorption of one or more companies by a single existing company. • There are two companies:- • Acquiring company is a single existing company that purchases the majority of equity shares of one or more companies. • Acquired companies are those companies that surrender the majority of their equity shares to an acquiring company.
  2. 2. • Meaning of Amalgamation: • "Amalgamation is a union of two or more companies, made with an intention to form a new company.“ • In amalgamation also there are two companies:- • Amalgamating companies are those two or more companies which willingly unite (combine) to carry on their business activities jointly. • Amalgamated company is a newly formed union (alliance) of two or more amalgamating companies. It has a separate legal existence with a new unique name.
  3. 3. MERGER AND AMALGAMATION (SECTION 232):- • The Tribunal, Merger, amalgamation or demerger is proposed in the application of compromise and arrangement under Section 230 (i) of the company, or (ii) of the creditors, or (iii) of the members of the company (iv) of the liquidator of company under liquidation, may order the meeting (A) Creditors or class of creditors, or (B) of the members or class of members, (x) to be called, (y) held and (z) conducted in the manner directed by the Tribunal.
  4. 4. Notice of the Meeting:- • The notice for a meeting called in pursuance of an order of the Tribunal, shall be sent to all the creditors or class of creditors and to all the members or class of members and the debenture – holders of the company. The notice shall be send individually at the registered address with the company. The notice shall be accompanied by – • (a) a statement disclosing the details of the compromise or arrangement; • (b) a copy of valuation report, if any; • (c) explaining effect of the scheme on the creditors, key managerial personnel, promoters and non – promoters members and debenture – holders; • (d) explaining effect of the scheme on any material interests of the directors of the company or the debenture trustees;
  5. 5. • e) such other prescribed matters. • In addition to the above, the companies merging or demerging, shall also circulate – • (f) the draft of the terms of scheme drawn up and adopted by the directors of the merging company; • (g) confirmation that the copy of the draft scheme has been filed with the Registrar; • (h) a report adopted by the directors of the merging companies effect of the scheme on each class of share holders, key managerial personnel, promoters and non – promoters shareholders laying out in particular the share exchange ratio, specifying any special valuation difficulties; • (i) the report of the expert with regards to valuation, if any;
  6. 6. • A notice along with all the documents shall also be sent to – • (a) The Central Government; • (b) The Income – tax authorities; • (c) The Reserve Bank of India; • (d) The Securities and Exchange Board of India; • (e) The Registrar; • (f) The stock exchanges; • (g) The Official Liquidator; • (h) The Competition Commission of India, is necessary; and • (i) Such other sectorial regulators or authorities which are likely to be affected by the compromise or arrangement. • These authorities shall require to made representation within a period of thirty days from the date of such notice. If these authorities fail to represent within this period, it is presumed that they have no representations to make on the proposals.
  7. 7. • (j) a supplementary accounting statement if the last annual accounts of any of the merging company relate to a financial year ending more than six months before the first meeting of the company summoned for the purposes of approving the scheme. • The notice shall also be placed on the website of the company. In case of a listed company, the notice shall also be sent to the Securities and Exchange Boards of India and stock exchanges for placing on their web – site. The Notice shall also be published in newspapers. • Any advertisement of or about the notice, shall indicate the time within which compromise or arrangement shall be made available to concerned person free of charge from the registered office of the company. • The notice shall provide that the person to whom the notice is sent, may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of the notice.
  8. 8. Effect of the Scheme:- • Where (i) majority of persons representing three – fourth in value of the creditors or class of creditors or members or class of members agree to compromise or arrangement and (ii) sanctioned by the Tribunal by an order; the scheme shall be binding on the company; all creditors or class of creditors or members or class of members or in case of a company being wound up, on the liquidator and the contributories of the company.
  9. 9. The Order:- • The Tribunal may, by order, sanction the compromise or arrangement or may make provision for the following matters – • (a) The transfer to the transferee company of the whole or any part of undertaking, property or liability of the transferor; • (b) The allotment or appropriation by the transferee company of any shares, debentures, policies or other like instruments in the company; • The company shall not hold any share in its own name or in the name of any trust in its behalf or on behalf of any of its subsidiary or associate companies and any such shall be cancelled or extinguished; • (c) The continuation by or against the transferee company of any legal proceedings pending by or against any transferor
  10. 10. • company on date of transfer; • (d) Dissolution, without winding – up, of any transferor company; • (e) The provision to be made for any person who dissent from the compromise or arrangement; • (f) Where share capital held by non – resident shareholders under foreign direct investment norms or guidelines, the allotment of shares of the transferee company to such shareholders shall be in manner specified in the order; • (g) The transfer of the employees of the transferor company to the transferee company to transferee company; • (h) Where the transferor is listed company and the transferee company is unlisted company –
  11. 11. • The transferee company shall remain unlisted company until it become an listed company; • If shareholders of the transferor company decide to opt out of the transferee company, provision for payment of the value of shares held by them and other benefits in accordance with pre –determined price formula or after valuation is made, and the arrangements may be made by the Tribunal. • The valuation shall not be less than the valuation in accordance with SEBI regulations. • (i) Where the transferor company is dissolved, the fee paid by the transferor company on its authorised capital shall be set – off against any fee payable by the transferee company on its authorised capital subsequent to the amalgamation; and • (j) Such incidental, consequential and supplemental matters as deemed necessary. • No compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company’s auditor has been filed with the Tribunal that the accounting treatment proposed in the scheme compromise or arrangement is in conformity with the accounting standards.
  12. 12. Filing with the Registrar:- Every company in relation to which the order is made shall cause a certified copy of the order to be file with the Registrar from registration within thirty days of the receipt of certified order. Effective Date:- The scheme shall clearly indicate an appointed date from which it shall be effective and shall be deemed to be effective from such date.
  13. 13. • Annual Statement on Scheme:- • Every company, in relation to which the order is made, shall file a statement 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. The statement shall be filed annually until the completion of the scheme.
  14. 14. Penalty:- • If a transferor company or a transferee company contravenes the provisions of this section, the transferor company or the transferee company, as the case may be, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of such transferor or transferee company who is in default, shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees, or with both.
  15. 15. MERGER OR AMALGAMATION OF A COMPANY WITH FOREIGN COMPANY (SECTION 234):- • The provision of this chapter shall also apply to the scheme of mergers and amalgamations between companies registered under the Companies Act, 2013 and companies incorporated in the jurisdictions of such countries as may be notified. • This notification is a precondition of cross country merger and amalgamation. • The Central Government may make rules in connection with mergers and amalgamations. • With prior approval of the Reserve Bank of India, a foreign company may merge into an Indian company or an Indian company may merge into a foreign company. • The terms and conditions may provide for payment of consideration to the shareholders of the merging company in cash or in Depository, or both. • A foreign company means a company or body corporate outside Indian nehether having a place of business in India or not.

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