Rasu Sharma provides an overview of the procedural aspects and process of amalgamation between two private limited companies in India. The document defines amalgamation as a legal process where two or more companies join together to form a new entity, with the amalgamating companies ceasing to exist and their shareholders becoming shareholders of the new company. It discusses the meaning and reasons for amalgamation under Indian law, including synergies, reduced costs, economies of scale, integration benefits, and tax advantages. The document also outlines the key authorities, documentation, meetings and steps involved in an amalgamation process in India.
The document discusses various aspects related to directors of a company under Indian law. It defines a director and outlines the minimum and maximum number of directors a company can have. It discusses the types of directors like independent, nominee, and alternate directors. It covers the appointment, tenure, duties, and removal of directors. The key ways directors can be appointed include by shareholders, board of directors, third parties, and the central government.
1. Origin Of Companies Act in India
2. What is a Company?
3. Definition & Characteristics
4. Different Type Of Entities:
a. On Basis Of Liability
b. On Basis Of Registration
5. Small Company
6. Private Company
7. Public Company
8. Unlimited Company
9. Foreign Company
10. Government Company
11. Holding, Subsidiary, Associate Company
12. Investment Companies
13. Promoters
14. Incorporation Of Registration
15. MOA, AOA
16. Tata Sons Vs Cyrus Mistry
17. Vodafone Tax Case
The document provides information on supply under GST including:
- Supply is defined broadly under GST and includes all forms of supply of goods/services for consideration including sale, transfer, barter etc.
- Certain activities such as permanent transfer of business assets are treated as supply even without consideration.
- Schedule II lists various transactions that are treated as supply of goods or services like renting of property, transfer of business assets etc.
- Time of supply determines when the tax liability arises and this is the earliest date among invoice issue, removal of goods or receipt of payment.
This document discusses managerial remuneration under the Companies Act of 1956 in India. It defines key terms like manager and director. It outlines that the maximum remuneration paid to a manager cannot exceed 11% of a company's profits and discusses how remuneration is calculated, including salaries, allowances, commissions, and other benefits. The total remuneration to a manager cannot exceed 5% of net profits. Remuneration to directors also requires prior government approval and a special resolution.
MEANING AND DEFINITION OF COMPANY, IT'S CHARACTERISTICS AND TYPES OF COMPANYKhushiGoyal20
This slide share is of subject company law . In this you will learn about meaning and definition of company , types / kinds of company (private , public , holding , subsidiary , limited liability and unlimited liability company etc.) , and its characteristics.
This document discusses mergers and amalgamations under Indian law. It defines mergers as a transaction where one company's assets and liabilities are transferred to another company, which ceases to exist, while its shareholders become shareholders of the acquiring company. Amalgamations involve the transfer of two or more companies' assets and liabilities to a new or existing company, with the amalgamating companies' shareholders becoming shareholders of the transferee company. The document outlines the legal procedures for mergers and amalgamations under the Companies Act of 1956 and describes different types of mergers and amalgamations. It discusses the key motivations for companies to engage in mergers and amalgamations, such as economies of scale, increased market share and revenue, and resource transfers.
This presentation discusses the appointment of directors in an Indian company. It defines a director as an individual who directs, controls, or manages the company's affairs. There are no educational or age qualifications required to become a director. Companies must have a minimum of 2 directors for a private company and 3 for a public company. Directors can be appointed in several ways, including by the articles, by shareholders at a general meeting, by other directors to fill vacancies, or by third parties like banks. The maximum number of directors is 12 for a public company and as specified in the articles for a private company.
The document discusses the rules for set off and carry forward of business losses under the Income Tax Act. It can be summarized as follows:
1) Section 70 allows for set off of losses from one source of income against profits from another source within the same head. Section 71 allows set off of losses under one head against income under another.
2) Business losses can be carried forward for 8 years and set off against future profits of any business. Speculation losses can be carried forward for 4 years against future speculation profits only.
3) Capital losses can be carried forward for 8 years against capital gains. House property losses can be carried forward for 8 years against future house property income. Losses from specified businesses
The document discusses various aspects related to directors of a company under Indian law. It defines a director and outlines the minimum and maximum number of directors a company can have. It discusses the types of directors like independent, nominee, and alternate directors. It covers the appointment, tenure, duties, and removal of directors. The key ways directors can be appointed include by shareholders, board of directors, third parties, and the central government.
1. Origin Of Companies Act in India
2. What is a Company?
3. Definition & Characteristics
4. Different Type Of Entities:
a. On Basis Of Liability
b. On Basis Of Registration
5. Small Company
6. Private Company
7. Public Company
8. Unlimited Company
9. Foreign Company
10. Government Company
11. Holding, Subsidiary, Associate Company
12. Investment Companies
13. Promoters
14. Incorporation Of Registration
15. MOA, AOA
16. Tata Sons Vs Cyrus Mistry
17. Vodafone Tax Case
The document provides information on supply under GST including:
- Supply is defined broadly under GST and includes all forms of supply of goods/services for consideration including sale, transfer, barter etc.
- Certain activities such as permanent transfer of business assets are treated as supply even without consideration.
- Schedule II lists various transactions that are treated as supply of goods or services like renting of property, transfer of business assets etc.
- Time of supply determines when the tax liability arises and this is the earliest date among invoice issue, removal of goods or receipt of payment.
This document discusses managerial remuneration under the Companies Act of 1956 in India. It defines key terms like manager and director. It outlines that the maximum remuneration paid to a manager cannot exceed 11% of a company's profits and discusses how remuneration is calculated, including salaries, allowances, commissions, and other benefits. The total remuneration to a manager cannot exceed 5% of net profits. Remuneration to directors also requires prior government approval and a special resolution.
MEANING AND DEFINITION OF COMPANY, IT'S CHARACTERISTICS AND TYPES OF COMPANYKhushiGoyal20
This slide share is of subject company law . In this you will learn about meaning and definition of company , types / kinds of company (private , public , holding , subsidiary , limited liability and unlimited liability company etc.) , and its characteristics.
This document discusses mergers and amalgamations under Indian law. It defines mergers as a transaction where one company's assets and liabilities are transferred to another company, which ceases to exist, while its shareholders become shareholders of the acquiring company. Amalgamations involve the transfer of two or more companies' assets and liabilities to a new or existing company, with the amalgamating companies' shareholders becoming shareholders of the transferee company. The document outlines the legal procedures for mergers and amalgamations under the Companies Act of 1956 and describes different types of mergers and amalgamations. It discusses the key motivations for companies to engage in mergers and amalgamations, such as economies of scale, increased market share and revenue, and resource transfers.
This presentation discusses the appointment of directors in an Indian company. It defines a director as an individual who directs, controls, or manages the company's affairs. There are no educational or age qualifications required to become a director. Companies must have a minimum of 2 directors for a private company and 3 for a public company. Directors can be appointed in several ways, including by the articles, by shareholders at a general meeting, by other directors to fill vacancies, or by third parties like banks. The maximum number of directors is 12 for a public company and as specified in the articles for a private company.
The document discusses the rules for set off and carry forward of business losses under the Income Tax Act. It can be summarized as follows:
1) Section 70 allows for set off of losses from one source of income against profits from another source within the same head. Section 71 allows set off of losses under one head against income under another.
2) Business losses can be carried forward for 8 years and set off against future profits of any business. Speculation losses can be carried forward for 4 years against future speculation profits only.
3) Capital losses can be carried forward for 8 years against capital gains. House property losses can be carried forward for 8 years against future house property income. Losses from specified businesses
Vivek Agarwal's presentation discusses the meaning and types of amalgamation. Amalgamation is when two or more companies combine to form a new entity. It results in the dissolution of the original companies and establishment of a new company with a unique name and identity. There are two main types of amalgamation - amalgamation in the nature of a merger, where shareholders of the combining companies become shareholders of the new company, and amalgamation in the nature of a purchase, where one company purchases the other. Purchase consideration is the amount paid by the purchasing company and can be calculated in different ways such as lump sum payment or net asset value method.
The Insolvency and Bankruptcy Code of 2016 consolidated existing bankruptcy laws in India to create a single law governing insolvency and bankruptcy. It aims to simplify and expedite bankruptcy proceedings while protecting creditor interests. Under the Code, a corporate insolvency resolution process is initiated when financial creditors with claims over Rs. 1 crore file an application with the National Company Law Tribunal. If no resolution plan is approved within 180 days, the company enters liquidation. The Code established the Insolvency and Bankruptcy Board of India as the regulator and introduced insolvency professionals to manage proceedings.
This document provides an overview of uniform and inter-firm costing methods. It defines uniform costing as applying consistent accounting principles across companies in the same industry. The key features are using common costing principles, preparing standardized cost statements, and adopting uniform costing techniques. Uniform costing aims to enable better cost comparisons between firms and improve performance. An effective uniform costing system requires cooperation between companies and information sharing. Inter-firm comparison allows companies to evaluate their costs and profits relative to others in the industry in order to identify weaknesses and improve efficiency.
Income tax authorities under Income tax act 1961Chirantan Tiwari
The document summarizes the key income tax authorities in India and their roles and responsibilities.
The main authorities are:
1) The Central Board of Direct Taxes (CBDT) which is responsible for policy and administration of direct taxes.
2) Income tax officers, tax recovery officers, and inspectors who handle assessments, collections, and enforcement.
3) The CBDT, directors general, commissioners, and joint commissioners can appoint other tax authorities and delegate powers.
4) The jurisdiction and powers of tax authorities are determined by the CBDT through orders and directions.
Holding company first came into existence in the US. It was created to overcome the restrictions imposed by the Anti-trust legislation. They were formed because businessmen wanted to have concerns under common control and within the framework of law.
Under the companies Act, 1956, a holding company is any company which holds more than half of the equity share capital of other companies or controls the composition of the board of directors of other companies. Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries). This arrangement makes venturing outside one's core industry possible and, under certain conditions, to benefit from tax consolidation, sharing of operating losses, and ease of divestiture. The legal definition of a holding company varies with the legal system. Some require holding of a majority (80 percent) or the entire (100 percent) voting shares of the subsidiary whereas other require as little as five percent.
Corporate restructuring refers to changes in a company's ownership, business model, assets, or alliances to improve shareholder value. It can involve reorganizing ownership, business operations, or assets. Common types of restructuring include mergers, acquisitions, divestitures, spin-offs, and joint ventures. Mergers are done horizontally within an industry, vertically with suppliers or customers, concentrically to share expertise, or conglomerately across industries. The goal is often to gain competitive advantages through economies of scale, expanded resources or markets, or reduced costs. Regulatory approval and shareholder approval are typically required for major restructuring transactions.
The document discusses the key components and features of electronic data processing (EDP) audits. It outlines several benefits of EDP audits, including high speed, large data storage capacity, accuracy, improved security and controls, better coordination and workflow, improved timeliness, and lower archiving costs compared to traditional paper-based auditing. It also describes the basic components and functions of a computer system, including input units, the central processing unit (comprised of the memory unit, control unit, and arithmetic/logic unit), and output units. The central processing unit is described as the "brain" of the computer that processes data with the help of its three constituent parts.
Financial restructuring is the process of rearranging a company's financial structure to avoid liquidation. It is necessary when companies face issues like misappropriated funds, obsolete technology, inefficient resource use, or external factors causing losses. Financial restructuring can involve reducing debt, reorganizing equity capital through share issuances or buybacks, or altering share capital through consolidation, subdivision, or conversion to stock. The goals are to make a company's capitalization balanced and improve its competitiveness and efficiency. Court approval and shareholder approval through special resolution are required for financial restructuring plans involving reductions to share capital.
The document discusses the concept of corporate personality and lifting the corporate veil. Corporate personality means a company's liabilities are the legal responsibility of the company and members will not be liable for debts. Normally there is a veil between the company and its members. However, in exceptional cases like fraud, improper conduct, or public interest, courts may lift the veil and disregard the separate legal entity to hold individual members responsible. The document outlines some key cases and circumstances under which courts have lifted the veil, including for the benefit of revenue, where the company is being used to avoid legal obligations, or where it is essentially a single economic entity.
Objectives & Agenda :
To know when income will be taxable in India and to understand the determination of residential status for individuals, HUF, Firms, AOP/BOI and Companies. To analyse the concept of POEM in relation to determination of residential status of Company.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
This document discusses takeovers in India. It defines a takeover as the acquisition of control of one company by another through the purchase of shares. There are different types of takeovers, including friendly/negotiated takeovers, hostile takeovers, and bailout takeovers. The key terms related to takeovers are also defined, such as acquirer, target company, control, promoter, and persons acting in concert. The document then discusses a historical example of Larsen & Toubro's cement business being acquired by Grasim Industries in a demerger transaction.
A debenture is a type of loan issued by a company to raise funds. There are different types of debentures based on security, redemption period, record keeping, and convertibility. Debentures offer companies a way to raise funds for a specific period without diluting ownership, but carry more risk than shares if the company fails to repay on time. Debenture holders are creditors entitled to interest payments, while shareholders are owners entitled to potential dividend payments from company profits.
The document discusses the doctrine of ultra vires, which refers to acts beyond the powers of a company as defined by its memorandum of association. It provides the historical case of Ashbury Railway Carriage & Iron Co. Ltd. vs. Riche, which established that a contract made for a purpose not allowed in the company's memorandum was void. The document also discusses an Indian case on an ultra vires donation and exceptions to the doctrine, noting that the ruling in Ashbury Railway Carriage still applies today in India without modification.
The document summarizes key provisions of the Banking Regulation Act, 1949 in India. It outlines definitions of banking and banking companies. It discusses the overriding effect of the Act over memorandum, articles, agreements and resolutions of banking companies. It also covers restrictions on use of banking terms, prohibition on trading activities, limits on property holding, payment of brokerage/commission, restrictions on floating charges and dividend payments. Further, it discusses appointment of directors, reserve requirements, cash reserve maintenance, subsidiary business activities and regulatory powers of RBI over banking companies.
The document summarizes India's Insolvency and Bankruptcy Code of 2016. It consolidates previous bankruptcy laws into a single code and establishes mechanisms for insolvency resolution, regulation, and adjudication. The code aims to promote business and availability of credit. It outlines procedures for insolvency resolution and liquidation of corporate entities. If resolution fails, assets are liquidated according to the order of priority of payments to secured creditors, wages, financial and unsecured debts. The code establishes a new framework for addressing insolvency and bankruptcy in India.
The document discusses the residential status and tax liability of individuals and entities in India. It defines the basic conditions to determine if a person is a resident, ordinary resident, or non-resident based on the number of days spent in India. An ordinary resident's total income and tax liability is the highest, including both Indian and foreign income. A non-resident's total income and tax liability is based only on Indian income. The residential status of entities like HUF, companies, firms, and AOP is also determined based on the control and management of their affairs being within or outside of India.
The SICA Act establishes mechanisms for identifying and addressing sickness in industrial companies. It places responsibility on company boards to report potential sickness issues to the BIFR. The Act also establishes the AAIFR appellate authority. Measures taken by experts under SICA aim to address industrial sickness through legal, financial and managerial restructuring in sectors where public money is invested. The BIFR was established under SICA to oversee rehabilitation of sick companies through schemes like financial reconstruction, management changes, amalgamation, sale or lease of assets.
This document discusses residential status under Indian income tax law. It explains that an individual's tax liability depends on their residential status, which can be resident, non-resident, or ordinarily resident. It also discusses how residential status is determined for individuals, HUFs, firms, companies and other persons. Key factors include number of days present in India and control and management of affairs. The document provides examples to illustrate how residential status is assessed and its implications for taxing different types of income received in or outside of India.
The document discusses the concepts of holding companies, subsidiaries, and cross-border transactions. It defines a holding company as one that controls the board composition and holds over half of another company's equity shares. It provides an example of Twinstar Holdings acquiring shares of Sterlite. The document also discusses foreign holding companies, board of directors' duties and potential conflicts of interest, and an example case of Ferruccio Sias vs Jai Manga Ram Mukhi regarding conflict of interest on a company board.
It is a presentation on basic introduction to the subject of CLSP - Secretarial Practices. This is published only for education and information purpose.
Vivek Agarwal's presentation discusses the meaning and types of amalgamation. Amalgamation is when two or more companies combine to form a new entity. It results in the dissolution of the original companies and establishment of a new company with a unique name and identity. There are two main types of amalgamation - amalgamation in the nature of a merger, where shareholders of the combining companies become shareholders of the new company, and amalgamation in the nature of a purchase, where one company purchases the other. Purchase consideration is the amount paid by the purchasing company and can be calculated in different ways such as lump sum payment or net asset value method.
The Insolvency and Bankruptcy Code of 2016 consolidated existing bankruptcy laws in India to create a single law governing insolvency and bankruptcy. It aims to simplify and expedite bankruptcy proceedings while protecting creditor interests. Under the Code, a corporate insolvency resolution process is initiated when financial creditors with claims over Rs. 1 crore file an application with the National Company Law Tribunal. If no resolution plan is approved within 180 days, the company enters liquidation. The Code established the Insolvency and Bankruptcy Board of India as the regulator and introduced insolvency professionals to manage proceedings.
This document provides an overview of uniform and inter-firm costing methods. It defines uniform costing as applying consistent accounting principles across companies in the same industry. The key features are using common costing principles, preparing standardized cost statements, and adopting uniform costing techniques. Uniform costing aims to enable better cost comparisons between firms and improve performance. An effective uniform costing system requires cooperation between companies and information sharing. Inter-firm comparison allows companies to evaluate their costs and profits relative to others in the industry in order to identify weaknesses and improve efficiency.
Income tax authorities under Income tax act 1961Chirantan Tiwari
The document summarizes the key income tax authorities in India and their roles and responsibilities.
The main authorities are:
1) The Central Board of Direct Taxes (CBDT) which is responsible for policy and administration of direct taxes.
2) Income tax officers, tax recovery officers, and inspectors who handle assessments, collections, and enforcement.
3) The CBDT, directors general, commissioners, and joint commissioners can appoint other tax authorities and delegate powers.
4) The jurisdiction and powers of tax authorities are determined by the CBDT through orders and directions.
Holding company first came into existence in the US. It was created to overcome the restrictions imposed by the Anti-trust legislation. They were formed because businessmen wanted to have concerns under common control and within the framework of law.
Under the companies Act, 1956, a holding company is any company which holds more than half of the equity share capital of other companies or controls the composition of the board of directors of other companies. Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries). This arrangement makes venturing outside one's core industry possible and, under certain conditions, to benefit from tax consolidation, sharing of operating losses, and ease of divestiture. The legal definition of a holding company varies with the legal system. Some require holding of a majority (80 percent) or the entire (100 percent) voting shares of the subsidiary whereas other require as little as five percent.
Corporate restructuring refers to changes in a company's ownership, business model, assets, or alliances to improve shareholder value. It can involve reorganizing ownership, business operations, or assets. Common types of restructuring include mergers, acquisitions, divestitures, spin-offs, and joint ventures. Mergers are done horizontally within an industry, vertically with suppliers or customers, concentrically to share expertise, or conglomerately across industries. The goal is often to gain competitive advantages through economies of scale, expanded resources or markets, or reduced costs. Regulatory approval and shareholder approval are typically required for major restructuring transactions.
The document discusses the key components and features of electronic data processing (EDP) audits. It outlines several benefits of EDP audits, including high speed, large data storage capacity, accuracy, improved security and controls, better coordination and workflow, improved timeliness, and lower archiving costs compared to traditional paper-based auditing. It also describes the basic components and functions of a computer system, including input units, the central processing unit (comprised of the memory unit, control unit, and arithmetic/logic unit), and output units. The central processing unit is described as the "brain" of the computer that processes data with the help of its three constituent parts.
Financial restructuring is the process of rearranging a company's financial structure to avoid liquidation. It is necessary when companies face issues like misappropriated funds, obsolete technology, inefficient resource use, or external factors causing losses. Financial restructuring can involve reducing debt, reorganizing equity capital through share issuances or buybacks, or altering share capital through consolidation, subdivision, or conversion to stock. The goals are to make a company's capitalization balanced and improve its competitiveness and efficiency. Court approval and shareholder approval through special resolution are required for financial restructuring plans involving reductions to share capital.
The document discusses the concept of corporate personality and lifting the corporate veil. Corporate personality means a company's liabilities are the legal responsibility of the company and members will not be liable for debts. Normally there is a veil between the company and its members. However, in exceptional cases like fraud, improper conduct, or public interest, courts may lift the veil and disregard the separate legal entity to hold individual members responsible. The document outlines some key cases and circumstances under which courts have lifted the veil, including for the benefit of revenue, where the company is being used to avoid legal obligations, or where it is essentially a single economic entity.
Objectives & Agenda :
To know when income will be taxable in India and to understand the determination of residential status for individuals, HUF, Firms, AOP/BOI and Companies. To analyse the concept of POEM in relation to determination of residential status of Company.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
This document discusses takeovers in India. It defines a takeover as the acquisition of control of one company by another through the purchase of shares. There are different types of takeovers, including friendly/negotiated takeovers, hostile takeovers, and bailout takeovers. The key terms related to takeovers are also defined, such as acquirer, target company, control, promoter, and persons acting in concert. The document then discusses a historical example of Larsen & Toubro's cement business being acquired by Grasim Industries in a demerger transaction.
A debenture is a type of loan issued by a company to raise funds. There are different types of debentures based on security, redemption period, record keeping, and convertibility. Debentures offer companies a way to raise funds for a specific period without diluting ownership, but carry more risk than shares if the company fails to repay on time. Debenture holders are creditors entitled to interest payments, while shareholders are owners entitled to potential dividend payments from company profits.
The document discusses the doctrine of ultra vires, which refers to acts beyond the powers of a company as defined by its memorandum of association. It provides the historical case of Ashbury Railway Carriage & Iron Co. Ltd. vs. Riche, which established that a contract made for a purpose not allowed in the company's memorandum was void. The document also discusses an Indian case on an ultra vires donation and exceptions to the doctrine, noting that the ruling in Ashbury Railway Carriage still applies today in India without modification.
The document summarizes key provisions of the Banking Regulation Act, 1949 in India. It outlines definitions of banking and banking companies. It discusses the overriding effect of the Act over memorandum, articles, agreements and resolutions of banking companies. It also covers restrictions on use of banking terms, prohibition on trading activities, limits on property holding, payment of brokerage/commission, restrictions on floating charges and dividend payments. Further, it discusses appointment of directors, reserve requirements, cash reserve maintenance, subsidiary business activities and regulatory powers of RBI over banking companies.
The document summarizes India's Insolvency and Bankruptcy Code of 2016. It consolidates previous bankruptcy laws into a single code and establishes mechanisms for insolvency resolution, regulation, and adjudication. The code aims to promote business and availability of credit. It outlines procedures for insolvency resolution and liquidation of corporate entities. If resolution fails, assets are liquidated according to the order of priority of payments to secured creditors, wages, financial and unsecured debts. The code establishes a new framework for addressing insolvency and bankruptcy in India.
The document discusses the residential status and tax liability of individuals and entities in India. It defines the basic conditions to determine if a person is a resident, ordinary resident, or non-resident based on the number of days spent in India. An ordinary resident's total income and tax liability is the highest, including both Indian and foreign income. A non-resident's total income and tax liability is based only on Indian income. The residential status of entities like HUF, companies, firms, and AOP is also determined based on the control and management of their affairs being within or outside of India.
The SICA Act establishes mechanisms for identifying and addressing sickness in industrial companies. It places responsibility on company boards to report potential sickness issues to the BIFR. The Act also establishes the AAIFR appellate authority. Measures taken by experts under SICA aim to address industrial sickness through legal, financial and managerial restructuring in sectors where public money is invested. The BIFR was established under SICA to oversee rehabilitation of sick companies through schemes like financial reconstruction, management changes, amalgamation, sale or lease of assets.
This document discusses residential status under Indian income tax law. It explains that an individual's tax liability depends on their residential status, which can be resident, non-resident, or ordinarily resident. It also discusses how residential status is determined for individuals, HUFs, firms, companies and other persons. Key factors include number of days present in India and control and management of affairs. The document provides examples to illustrate how residential status is assessed and its implications for taxing different types of income received in or outside of India.
The document discusses the concepts of holding companies, subsidiaries, and cross-border transactions. It defines a holding company as one that controls the board composition and holds over half of another company's equity shares. It provides an example of Twinstar Holdings acquiring shares of Sterlite. The document also discusses foreign holding companies, board of directors' duties and potential conflicts of interest, and an example case of Ferruccio Sias vs Jai Manga Ram Mukhi regarding conflict of interest on a company board.
It is a presentation on basic introduction to the subject of CLSP - Secretarial Practices. This is published only for education and information purpose.
CLSP - Unit 7 - Winding Up of CompaniesAjay Nazarene
It is a presentation on basic introduction to the subject of CLSP - Winding Up of Companies. This is published only for education and information purpose.
Holding company and subsidiary company – accounting perspective Dr. Trilok Kumar Jain
The document provides an overview of the accounting practices for consolidation of financial statements between a holding company and its subsidiaries. It defines key terms like holding company, subsidiary, minority interest, and pre-acquisition profit/loss. It also describes the legal requirements for disclosure in consolidation and the process for consolidating the balance sheets and income statements of the holding company and its subsidiaries by eliminating inter-company transactions and computing minority interest.
This document discusses various concepts related to the amalgamation and reconstruction of companies in India. It defines amalgamation as the liquidation of two existing companies followed by the formation of a new company to purchase their assets and liabilities. Absorption is defined as one existing company purchasing another existing company. Reconstruction can be external, involving the liquidation and repurchase of a loss-making company, or internal through reducing capital to restructure the company. The document then examines accounting standards for amalgamations and the various methods for calculating purchase consideration.
Amalgamation refers to the merger of two or more companies into one new company. It involves the transfer of two or more companies' businesses to a newly incorporated company. There are two types of amalgamation - amalgamation in the nature of merger and amalgamation in the nature of purchase. Amalgamation can be accounted for using either the pooling of interests method or the purchase method. Disclosures as per Accounting Standard 14 are required in the financial statements following an amalgamation.
Holding company accounts and consolidated Balance SheetAugustin Bangalore
1. The document discusses concepts related to holding companies including analysis of capital profits, calculation of capital reserve/goodwill, treatment of minority interest, and preparation of consolidated balance sheets.
2. Capital profits refer to profits of a subsidiary earned prior to acquisition by the holding company. Revenue profits are earned after the acquisition date.
3. In a consolidated balance sheet, common transactions between the holding company and subsidiary like bills receivable/payable are eliminated to show only balances with outside parties.
It is a presentation on basic introduction to the subject of CLSP - Documents of a Company.
This is published only for education and information purpose.
CLSP - Unit 4 - Share Capital & MembershipAjay Nazarene
The document provides an overview of share capital, shares, prospectuses, and shareholder rights and responsibilities under Indian company law. It defines key terms like shares, share certificates, types of shares, and how shares are issued and transferred. It also summarizes the required contents of a prospectus, the process of share dematerialization, who qualifies as a member or shareholder, and the rights and potential liabilities of members.
It is a presentation on basic introduction to the subject of CLSP - Management of Company. This is published only for education and information purpose.
This project report discusses mergers and amalgamations under the recently notified Companies Act 2013. Some key highlights include:
- Chapter XV of the new Act consolidates provisions dealing with compromises, arrangements, and amalgamations and sets up the NCLT to hear related proposals.
- The new Act aims to make the merger process easier, faster, and cleaner for companies through reforms like fast-track mergers and participation through postal ballot approval.
- It discusses the regulatory framework around mergers in India, including relevant sections of the Companies Act 2013, Accounting Standards, Court Rules, and other regulations.
- The report provides an overview of different types of mergers like conglomerate, horizontal, vertical mergers and analy
Mergers and acquisitions an indian perspectiveKiran Shinde
The document discusses mergers and acquisitions from an Indian perspective. It describes how M&A activities have grown in India over the past decade but declined significantly during the recent economic downturn. Domestic M&A deals in India have remained more resilient than cross-border deals. The document also defines key M&A concepts like mergers, amalgamations, takeovers, and joint ventures.
A business is a legally recognized organization designed to provide goods and services to consumers. Businesses are predominantly formed in capitalist economies to earn profits that increase the wealth of owners and grow the business itself. There are several common forms of business ownership including sole proprietorships, partnerships, corporations, and cooperatives. A sole proprietorship is owned and run by one individual, while partnerships involve multiple owners sharing profits and losses. Corporations are legally separate entities from shareholders and employees. Cooperatives are owned and controlled equally by those who use its services or work there. Joint ventures involve two or more parties undertaking economic activity together by contributing equity to a new entity.
amalgamation UNDER COMPANIES ACT 2013 .pptxManoj Pandey
This document provides an overview of corporate restructuring through mergers and amalgamations under the Companies Act, 2013 in India. It discusses key concepts like organic and inorganic growth, different types of mergers, the regulatory framework and process for approval. The highlights include setting up the National Company Law Tribunal to approve merger proposals, easier shareholder approval process and consolidation of applicable laws under the new Act. The document also provides details on drafting a scheme of merger, including defining purposes, rationale and accounting treatment. It outlines the application process to the NCLT for approval of a merger scheme in India.
This document provides an overview of mergers and acquisitions (M&A). It discusses the key reasons and rationales for M&As, including synergistic operating economics, diversification, taxation benefits, and growth opportunities. The document also explains the different types of M&A transactions and defines key terms like mergers, acquisitions, amalgamations, and consolidations. It provides examples of well-known M&A deals in India and their rationales. Finally, it discusses the concept of synergy gains from M&As and how the combined value of the merging companies can exceed the sum of their individual values.
Mergers_ Tool to Survive the Second Wave of Covid19 3.pdfmyLawyerAdvise
One of the main objectives of an entity is GOING CONCERN. Many business organisations shut down as a result of covid due to lack of resources in operating their routine transactions. The most suitable solution for small scale businesses post covid is merger. Mergers will lead to expansion of resources, retention of employment, fund rotation, adequate balance of demand and supply etc. As the firms emerge from the pandemic, mergers would be the best way to come out of the financial stress for small businesses. It will help leaders gain economies of scale or at least the potential to run more efficiently. Once the economy recovers and accelerates out of recession, the small businesses can take advantage of the environment to execute its strategic acquisition agenda and to position the business to exceed industry-average growth. Mergers are a great way to lock down your business and create job opportunities, allowing customers to access your products and services. It will be a mutually beneficial situation
The document provides an overview of mergers and acquisitions in India, including:
1) It describes different types of mergers such as horizontal, vertical, congeneric, and conglomerate mergers. It also describes different types of acquisitions such as friendly, hostile, leveraged buyouts, and bailout takeovers.
2) It explains the legal and regulatory process for M&As in India, including the letter of intent, due diligence, transition agreements, representations and warranties in the agreement, and confidentiality agreements.
3) Key steps in the M&A process include negotiating a letter of intent, conducting due diligence, drafting the merger agreement to address issues found in due dilig
Mergers and acquisitions involve the combination of two or more companies. A merger combines two approximately equal-sized companies, while an acquisition sees one larger company purchase a smaller one. There are several types of mergers, including horizontal (between competitors), vertical (between companies in a supply chain), and conglomerate (between unrelated industries). Reasons for mergers and acquisitions include gaining synergies between companies, removing unprofitable business lines, focusing on core competencies, generating cash, withstanding competition, and facilitating further growth.
A promoter establishes a company by preparing important documents like the memorandum of association and articles of association. The promoter investigates the business idea, arranges financing, and incorporates the company by registering it with the registrar of companies. Key documents that must be filed include the memorandum of association, articles of association, and documents related to the directors and initial shareholders. Once incorporated, a public company must obtain a certificate of commencement of business before beginning operations.
Competitive Advantage And Core Competenciespriyanka
The document discusses competitive advantage, core competencies, and various corporate strategies. It provides definitions and concepts related to competitive advantage, core competencies, and strategies such as amalgamation, merger, demerger, slump sale, takeover, disinvestment, joint venture, and franchising. Core competencies are unique skills or expertise that provide competitive advantages and allow companies to access new markets. Effective strategies allow companies to optimize their business portfolio.
This document discusses the different forms of business ownership organization including sole proprietorship, partnership, cooperative society, and joint stock company. It outlines the key characteristics of an ideal form of organization such as ease of formation, ability to raise capital, limited liability, flexibility, and continuity. The ideal form would balance these factors. Entrepreneurs must consider the type of business, operations, financing needs, control desires, and tax implications when choosing the most suitable ownership structure. Overall, the ability to raise capital and limit liability are typically the most important factors driving the selection of an appropriate form of business organization.
The document discusses mergers and acquisitions. It defines mergers as a transaction where two firms integrate operations to create a stronger competitive advantage. It describes different types of mergers such as horizontal, vertical, conglomerate, market extension, and product extension mergers. Acquisitions are defined as one company purchasing another. The key difference between mergers and acquisitions is that mergers form a new company while acquisitions do not. Synergy effects are cited as a driving force behind M&A deals. The regulatory framework around M&As in India is also summarized.
This document provides an overview of mergers and acquisitions (M&A). It discusses the reasons and rationale for M&As, including synergistic operating economics, diversification, taxation benefits, and growth opportunities. The document also describes different types of mergers, such as horizontal, vertical, conglomerate, and reverse mergers. It explains the concept of synergy gains from M&As and how the combined value of the merging companies can be greater than the sum of their individual values.
Two companies, Maruti Motors of India and Suzuki of Japan, amalgamated to form a new company called Maruti Suzuki India Limited. As part of the amalgamation, Maruti Motors and Suzuki ceased to exist as individual entities, and transferred their assets and liabilities to the newly formed Maruti Suzuki. The shareholders of Maruti Motors and Suzuki received shares in Maruti Suzuki. This allowed the two companies to combine their resources and operations to form a larger automotive manufacturing company in India.
Role of due diligence in mergers and acquisitionChenoy Ceil
Due diligence is the process of evaluating a potential merger or acquisition by investigating financial, legal and other material information. It helps identify risks and structure the transaction. Key aspects of due diligence include analyzing company documents, reports, contracts and intellectual property. Conducting due diligence helps validate the business plan and mitigate risks to make the transaction successful. It is an ongoing process that continues throughout the alliance between the merging companies.
The document discusses key provisions of the Companies (Amendment) Act 2015 and the Companies Act 2013 regarding companies in India. Some of the key points covered include:
- The Companies (Amendment) Act 2015 removed the minimum paid up share capital requirement and made the common seal optional for companies. It also introduced penalties for accepting deposits without following proper regulations.
- A company is defined as one incorporated under the Companies Act or previous company laws. The memorandum of association outlines the company's name, objectives, and capital structure while the articles of association contain internal management rules.
- There are different types of companies like public, private, unlimited companies, etc. based on share capital and liability. Appointing at
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A company is a voluntary association of persons formed for the purpose of doing business, having a distinct name and limited liability. It can be incorporated under the Companies Act and have various legal features such as being a separate legal entity, limited liability for members, perpetual succession regardless of member changes, and the ability to own property, sue and be sued. The corporate veil provides separation between the company and its members, but can be lifted by the court in cases of fraud, tax evasion or other wrongful conduct. There are various types of companies defined by ownership and other characteristics as outlined in the document.
Corporate restructuring refers to changes in ownership, business mix, assets, and alliances to enhance shareholder value. It involves ownership restructuring, business restructuring, and asset restructuring through mergers, acquisitions, divestitures, and other methods. Mergers can be horizontal, vertical, or conglomerate. Motives for restructuring include limiting competition, utilizing underused resources, achieving economies of scale, and gaining access to new markets. Legal procedures and valuation methods are required for mergers and acquisitions.
Mergers and amalgamations allow companies to achieve synergies, economies of scale, tax advantages, and strengthen their financial position. The Companies Act of 1956 allows for compromises or arrangements between companies and their creditors/members, including schemes for reconstruction or amalgamation involving transfer of undertakings between companies. Closure of an industrial undertaking requires 60 days advance notice to the government, with compensation of 15 days pay per year of service over 6 months paid to eligible workers. Certain circumstances like acts of God or eminent domain may exempt employers from these requirements.
Similar to Procedural aspects and process of amalgamation (20)
1. RASU SHARMARASU SHARMA
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+91 97164 13016
Procedural aspects and process of
amalgamation between two Private
Limited Companies
- A Court Based Restructuring
2. RASU SHARMA
rasu@lexport.in
Meaning of AmalgamationMeaning of Amalgamation
Reasons for AmalgamationReasons for Amalgamation
Governing Statutes (Overview of Legal Provisions)Governing Statutes (Overview of Legal Provisions)
Legal Due diligence before AmalgamationLegal Due diligence before Amalgamation
List of forms under Companies (Court) Rules, 1959List of forms under Companies (Court) Rules, 1959
Authorities involved in AmalgamationAuthorities involved in Amalgamation
Number of Meetings for AmalgamationNumber of Meetings for Amalgamation
Documentation in AmalgamationDocumentation in Amalgamation
Steps for AmalgamationSteps for Amalgamation
FLOW OF PRESENTATIONFLOW OF PRESENTATION
3. RASU SHARMA
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• Amalgamation is a legal process by which two or moreAmalgamation is a legal process by which two or more
companies joined together to form a new entity or one orcompanies joined together to form a new entity or one or
more companies are to be absorbed or blended with anothermore companies are to be absorbed or blended with another
and as a consequence the amalgamating company loses itsand as a consequence the amalgamating company loses its
existence and its shareholders become the shareholders ofexistence and its shareholders become the shareholders of
new company or the amalgamated company.new company or the amalgamated company.
Meaning of AmalgamationMeaning of Amalgamation
A Pvt.A Pvt.
Ltd.Ltd.
B Pvt.B Pvt.
Ltd.Ltd.
C Pvt.C Pvt.
Ltd.Ltd.
A Pvt.A Pvt.
Ltd.Ltd.
B Pvt.B Pvt.
Ltd.Ltd.
A Pvt.A Pvt.
Ltd.Ltd.
OROR
4. RASU SHARMA
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• The shareholders of amalgamating companies get shares ofThe shareholders of amalgamating companies get shares of
amalgamated company. The shareholders of eachamalgamated company. The shareholders of each
amalgamating company become the shareholders in theamalgamating company become the shareholders in the
amalgamated company.amalgamated company.
• Therefore, the essence of amalgamation is to make anTherefore, the essence of amalgamation is to make an
arrangement thereby uniting the undertakings of two or morearrangement thereby uniting the undertakings of two or more
companies so that they become vested in, or under thecompanies so that they become vested in, or under the
control of one company which may or may not be the originalcontrol of one company which may or may not be the original
of the two or more of such uniting companies.of the two or more of such uniting companies.
Meaning of AmalgamationMeaning of Amalgamation
5. RASU SHARMA
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• The companies going into liquidation or merged companiesThe companies going into liquidation or merged companies
are called vendor companies or transferor companies. Theare called vendor companies or transferor companies. The
new company which is formed to take over the liquidatednew company which is formed to take over the liquidated
companies or the company with which the transferorcompanies or the company with which the transferor
company is merged is called transferee or vendee.company is merged is called transferee or vendee.
• In the case of amalgamation the assets and liabilities ofIn the case of amalgamation the assets and liabilities of
transferor company(s) are amalgamated and the transfereetransferor company(s) are amalgamated and the transferee
company becomes vested with all such assets and liabilities.company becomes vested with all such assets and liabilities.
Meaning of AmalgamationMeaning of Amalgamation
6. RASU SHARMA
rasu@lexport.in
• It is interesting to note that the Companies Act, 1956 andIt is interesting to note that the Companies Act, 1956 and
also the Companies Act, 2013, have not defined the termalso the Companies Act, 2013, have not defined the term
‘amalgamation’.‘amalgamation’.
• However Section 2(1B) of the Income Tax Act, 1961 definesHowever Section 2(1B) of the Income Tax Act, 1961 defines
‘amalgamation’ as follows:‘amalgamation’ as follows:
““Amalgamation in relation to companies, means the merger ofAmalgamation in relation to companies, means the merger of
one or more companies with another company or the mergerone or more companies with another company or the merger
of two or more companies to form one company (the companyof two or more companies to form one company (the company
or companies which so merge being referred to asor companies which so merge being referred to as
amalgamating company or companies and the company withamalgamating company or companies and the company with
which they merge or which is formed as result of the merger,which they merge or which is formed as result of the merger,
as the amalgamated company), in such a manner that:as the amalgamated company), in such a manner that:--
Meaning of AmalgamationMeaning of Amalgamation
7. RASU SHARMA
rasu@lexport.in
(i)(i) all the property of the amalgamating company orall the property of the amalgamating company or
companies immediately before the amalgamationcompanies immediately before the amalgamation
becomes the property of the amalgamated companybecomes the property of the amalgamated company
by virtue of the amalgamation;by virtue of the amalgamation;
(ii)(ii) all the liabilities of the amalgamating company orall the liabilities of the amalgamating company or
companies immediately before the amalgamationcompanies immediately before the amalgamation
become the liabilities of the amalgamated companybecome the liabilities of the amalgamated company
by virtue of the amalgamation;by virtue of the amalgamation;
(iii)(iii) shareholders holding not less than three-fourth inshareholders holding not less than three-fourth in
value of the shares in the amalgamating company orvalue of the shares in the amalgamating company or
companies (other than shares already held thereincompanies (other than shares already held therein
immediately before the amalgamation by or by aimmediately before the amalgamation by or by a
nominee for, the amalgamated company or itnominee for, the amalgamated company or it
subsidiary) become shareholders of thesubsidiary) become shareholders of the
amalgamated company by virtue of theamalgamated company by virtue of the
amalgamation,amalgamation,
Meaning of AmalgamationMeaning of Amalgamation
8. RASU SHARMA
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otherwise than as a result of the acquisition of theotherwise than as a result of the acquisition of the
property of one company by another company pursuantproperty of one company by another company pursuant
to the purchase of such property by the other companyto the purchase of such property by the other company
or as a result of the distribution of such property to theor as a result of the distribution of such property to the
other company after the winding up of the firstother company after the winding up of the first
mentioned company.”mentioned company.”
Thus, a merger to qualify as an ‘amalgamation’ for theThus, a merger to qualify as an ‘amalgamation’ for the
purpose of the Income Tax Act, the above threepurpose of the Income Tax Act, the above three
conditions have to be satisfied.conditions have to be satisfied.
Meaning of AmalgamationMeaning of Amalgamation
9. RASU SHARMA
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• The Amalgamation must form part of the business andThe Amalgamation must form part of the business and
corporate strategies aimed at creating sustainablecorporate strategies aimed at creating sustainable
competitive advantage for the firm. Mergers andcompetitive advantage for the firm. Mergers and
amalgamations are strategic decisions leading to theamalgamations are strategic decisions leading to the
maximisation of a company’s growth.maximisation of a company’s growth.
• Mergers and amalgamations are usually intended to achieveMergers and amalgamations are usually intended to achieve
any or some or all of the following purposes:any or some or all of the following purposes:
1.1. Synergistic operational advantagesSynergistic operational advantages –– Coming together toComing together to
produce a new or enhanced effect compared to separateproduce a new or enhanced effect compared to separate
effects.effects.
2.2. Reduction in production, administrative, selling, legal andReduction in production, administrative, selling, legal and
professional expenses.professional expenses.
Reasons for AmalgamationReasons for Amalgamation
10. RASU SHARMA
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3.3. Economies of scale (scale effect)Economies of scale (scale effect) –– Reduction in theReduction in the
average cost of production and increase the productionaverage cost of production and increase the production
so that products can be offered at more competitive priceso that products can be offered at more competitive price
to capture a large market share.to capture a large market share.
4.4. Benefits of integrationBenefits of integration –– Combining two or moreCombining two or more
companies under the same control for their mutualcompanies under the same control for their mutual
benefit by reducing competition, saving costs bybenefit by reducing competition, saving costs by
reducing overheads, capturing a larger market share,reducing overheads, capturing a larger market share,
pooling technical or financial resources, cooperating onpooling technical or financial resources, cooperating on
research and development, etc.research and development, etc.
5.5. Optimum use of capacities and factors of production.Optimum use of capacities and factors of production.
Reasons for AmalgamationReasons for Amalgamation
11. RASU SHARMA
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6.6. Tax advantagesTax advantages –– Carry forward and set off of losses of aCarry forward and set off of losses of a
loss-making amalgamating company against profits of aloss-making amalgamating company against profits of a
profit-making amalgamated company, e.g. Section 72A ofprofit-making amalgamated company, e.g. Section 72A of
the Income-Tax Act, 1961.the Income-Tax Act, 1961.
7.7. To Avoid Financial constraints for expansionTo Avoid Financial constraints for expansion –– AA
company which has the capacity to expand but cannotcompany which has the capacity to expand but cannot
do so due to financial constraints may opt for mergingdo so due to financial constraints may opt for merging
into another company which can provide funds forinto another company which can provide funds for
expansion.expansion.
8.8. Strengthening financial strength.Strengthening financial strength.
9.9. Diversification.Diversification.
Reasons for AmalgamationReasons for Amalgamation
12. RASU SHARMA
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10.10. Advantage of brand-equity.Advantage of brand-equity.
11.11. Loss of objectives with which several companies were setLoss of objectives with which several companies were set
up as independent entities.up as independent entities.
12.12. Survival and Sustaining growth.Survival and Sustaining growth.
13.13. Competitive advantageCompetitive advantage –– The factors that give a companyThe factors that give a company
an advantage over its rivals.an advantage over its rivals.
14.14. Eliminating or weakening competition.Eliminating or weakening competition.
15.15. Revival of a weak or sick company.Revival of a weak or sick company.
16.16. Accelerating company’s market power and reducing theAccelerating company’s market power and reducing the
severity of competition.severity of competition.
Reasons for AmalgamationReasons for Amalgamation
13. RASU SHARMA
rasu@lexport.in
The process of Amalgamation is governed by the followingThe process of Amalgamation is governed by the following
Statutes:Statutes:
1.1. Companies Act, 1956:Companies Act, 1956: Chapter V containing SectionsChapter V containing Sections
390 to 396A of the Companies Act, 1956 is a complete code in390 to 396A of the Companies Act, 1956 is a complete code in
itself. It provides for the law and procedure to be complied withitself. It provides for the law and procedure to be complied with
by the companies for compromises, arrangements andby the companies for compromises, arrangements and
reconstruction.reconstruction.
2.2. Companies (Court) Rules, 1959:Companies (Court) Rules, 1959: Rules 67 to 87 of theRules 67 to 87 of the
Companies (Court) Rules, 1959 lay down the court procedureCompanies (Court) Rules, 1959 lay down the court procedure
for the approval of schemes.for the approval of schemes.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
14. RASU SHARMA
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3.3. Companies Act, 2013:Companies Act, 2013: The new Companies Act, 2013The new Companies Act, 2013
contains the provisions regarding Compromises,contains the provisions regarding Compromises,
Arrangements and Amalgamations under Chapter XVArrangements and Amalgamations under Chapter XV
from Section 230 to Section 240. Under the new Act anfrom Section 230 to Section 240. Under the new Act an
Indian company can merge with any foreign companyIndian company can merge with any foreign company
whether having a place of business in India or not. It iswhether having a place of business in India or not. It is
pertinent to note here that earlier under the Companiespertinent to note here that earlier under the Companies
Act, 1956 there was no such provisions regarding mergerAct, 1956 there was no such provisions regarding merger
of an Indian company with any foreign company outsideof an Indian company with any foreign company outside
India. The Act also contains provisions regarding fastIndia. The Act also contains provisions regarding fast
track and simplified procedure for mergers andtrack and simplified procedure for mergers and
amalgamations of certain class of companies such asamalgamations of certain class of companies such as
holding and subsidiary, and small companies underholding and subsidiary, and small companies under
section 233.section 233.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
15. RASU SHARMA
rasu@lexport.in
Gist of Chapter XV of the Companies Act, 2013 :Gist of Chapter XV of the Companies Act, 2013 :
COMPROMISES, ARRANGEMENTS AND AMALGAMATIONSCOMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
Section No. Subject headings
230 Power to compromise or make arrangements with
creditors and members
231 Power of Tribunal to enforce compromise or
arrangement
232 Merger and amalgamation of companies
233 Merger or amalgamation of certain companies
234 Merger or amalgamation of company with foreign
company
235 Power to acquire shares of shareholders dissenting
from scheme or contract approved by majority
16. RASU SHARMA
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Gist of Chapter XV of the Companies Act, 2013 :Gist of Chapter XV of the Companies Act, 2013 :
COMPROMISES, ARRANGEMENTS AND AMALGAMATIONSCOMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
Section No. Subject headings
236 Purchase of minority shareholding
237 Power of Central Government to provide for
amalgamation of companies in public interest
238 Registration of offer of schemes involving transfer of
shares
239 Preservation of books and papers of amalgamated
companies
240 Liability of officers in respect of offences committed
prior to merger, amalgamation, etc.
17. RASU SHARMA
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4.4. Draft Companies (Compromises, Arrangements andDraft Companies (Compromises, Arrangements and
Amalgamations) Rules, 2016:Amalgamations) Rules, 2016: The Central GovernmentThe Central Government
through Ministry of Corporate Affairs has also issuedthrough Ministry of Corporate Affairs has also issued
draft Rules on Compromises, Arrangements anddraft Rules on Compromises, Arrangements and
Amalgamations. These rules provide for procedures inAmalgamations. These rules provide for procedures in
Compromises, Arrangements and Amalgamations underCompromises, Arrangements and Amalgamations under
the Companies Act, 2013.the Companies Act, 2013.
5.5. Income Tax Act, 1961:Income Tax Act, 1961: Sections 35(5), 35A(6), 35E(7),Sections 35(5), 35A(6), 35E(7),
41(4) Explanation 2, 43(1) Explanation 7, 43(6)41(4) Explanation 2, 43(1) Explanation 7, 43(6)
Explanation 2, 43C, 47 (vi) & (vii), 49(1)(iii)(e), 49(2), andExplanation 2, 43C, 47 (vi) & (vii), 49(1)(iii)(e), 49(2), and
72A of Income Tax Act provides tax benefits in case of72A of Income Tax Act provides tax benefits in case of
merger and amalgamation.merger and amalgamation.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
18. RASU SHARMA
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6.6. Accounting Standard-14:Accounting Standard-14: The Institute of CharteredThe Institute of Chartered
Accountants of India has introduced AccountingAccountants of India has introduced Accounting
Standard -14 (AS 14) on ‘Accounting for Amalgamations’.Standard -14 (AS 14) on ‘Accounting for Amalgamations’.
The standard recognizes two types of amalgamation –The standard recognizes two types of amalgamation –
(i)(i) Amalgamation in the nature of merger; andAmalgamation in the nature of merger; and
(ii)(ii) Amalgamation in the nature of purchase.Amalgamation in the nature of purchase.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
19. RASU SHARMA
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7.7. FEMA, 1999:FEMA, 1999: Where the scheme of amalgamationWhere the scheme of amalgamation
envisages issue of shares/cash option to Non-Residentenvisages issue of shares/cash option to Non-Resident
Indians (NRIs), the amalgamated company is required toIndians (NRIs), the amalgamated company is required to
obtain the permission of Reserve Bank of India.obtain the permission of Reserve Bank of India.
Regulation 7 of the Foreign Exchange ManagementRegulation 7 of the Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident(Transfer or Issue of Security by a Person Resident
outside India) Regulations, 2000 contains provisionsoutside India) Regulations, 2000 contains provisions
regarding issue of shares to NRIs under a scheme ofregarding issue of shares to NRIs under a scheme of
amalgamation.amalgamation.
8.8. Competition Act, 2002:Competition Act, 2002: Regulation of combinations asRegulation of combinations as
provided under Sections 5 and 6 of the Competition Actprovided under Sections 5 and 6 of the Competition Act
is also required to be complied by companies, ifis also required to be complied by companies, if
applicable.applicable.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
20. RASU SHARMA
rasu@lexport.in
9.9. Indian Stamp Act:Indian Stamp Act: Indian Stamp Act provides forIndian Stamp Act provides for
payment of stamp duty. In amalgamation of companiespayment of stamp duty. In amalgamation of companies
following types of stamp duty is levied:-following types of stamp duty is levied:-
(i)(i) Stamp duty on the Court Order:Stamp duty on the Court Order: The order of the Court underThe order of the Court under
Section 394 of the Companies Act, 1956 requiring the transferSection 394 of the Companies Act, 1956 requiring the transfer
of assets and liabilities of the transferor company to theof assets and liabilities of the transferor company to the
transferee company is a conveyance and hence chargeable totransferee company is a conveyance and hence chargeable to
stamp duty.stamp duty.
(ii)(ii) Stamp duty on the other documents:Stamp duty on the other documents: Usually in anUsually in an
amalgamation of companies, several other documents,amalgamation of companies, several other documents,
agreements, indemnity bonds are executed, depending uponagreements, indemnity bonds are executed, depending upon
the facts of each case and requirements of the parties. Stampthe facts of each case and requirements of the parties. Stamp
duty would also be leviable on such documents, agreements,duty would also be leviable on such documents, agreements,
indemnity bonds, as per the nature of the instrument and itsindemnity bonds, as per the nature of the instrument and its
contents.contents.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
21. RASU SHARMA
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10.10. CENVAT Credit Rules, 2004:CENVAT Credit Rules, 2004: Indian Rule 10 of the CENVATIndian Rule 10 of the CENVAT
Credit Rules, 2004 deals with the transfer of credit. It providesCredit Rules, 2004 deals with the transfer of credit. It provides
that if a manufacturer of the final product shifts his factory tothat if a manufacturer of the final product shifts his factory to
another site or the factory is transferred on account of changeanother site or the factory is transferred on account of change
in ownership or on account of sale, merger, amalgamation,in ownership or on account of sale, merger, amalgamation,
lease or transfer of the factory to a joint venture with thelease or transfer of the factory to a joint venture with the
specific provision for transfer of liabilities of such factory, thenspecific provision for transfer of liabilities of such factory, then
the manufacturer shall be allowed to transfer the CENVATthe manufacturer shall be allowed to transfer the CENVAT
credit lying unutilized in his accounts to such transferred,credit lying unutilized in his accounts to such transferred,
sold, merged, leased or amalgamated factory. Further, if asold, merged, leased or amalgamated factory. Further, if a
provider of output service shifts or transfers his business onprovider of output service shifts or transfers his business on
account of change in ownership or on account of sale, merger,account of change in ownership or on account of sale, merger,
amalgamation, lease or transfer of the business to a jointamalgamation, lease or transfer of the business to a joint
venture with the specific provision for transfer of liabilities ofventure with the specific provision for transfer of liabilities of
such business, then, the provider of output service shall besuch business, then, the provider of output service shall be
allowed to transfer the CENVAT credit lying unutilized in hisallowed to transfer the CENVAT credit lying unutilized in his
account to such transferred, sold, merged, leased oraccount to such transferred, sold, merged, leased or
amalgamated business.amalgamated business.
Governing Statutes (OverviewGoverning Statutes (Overview
of Legal Provisions)of Legal Provisions)
22. RASU SHARMA
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• Before Amalgamation, the Transferee Company should haveBefore Amalgamation, the Transferee Company should have
a legal due diligence in the affairs of the Transferora legal due diligence in the affairs of the Transferor
Company(ies).Company(ies).
• A Legal due diligence is undertaken to achieve the followingA Legal due diligence is undertaken to achieve the following
objectives:objectives:
1.1. To assess the impact of likely results of current andTo assess the impact of likely results of current and
potentially pending litigation and result of recentlypotentially pending litigation and result of recently
concluded litigation,concluded litigation,
2. To ensure that the subject company has complied with the2. To ensure that the subject company has complied with the
provisions of all the relevant statutes and there would be noprovisions of all the relevant statutes and there would be no
potential liability on account of non compliance,potential liability on account of non compliance,
Legal Due diligence ChecklistLegal Due diligence Checklist
before Amalgamationbefore Amalgamation
23. RASU SHARMA
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3. To assess the current and anticipated future impact of3. To assess the current and anticipated future impact of
government regulations on the entity's cost level.government regulations on the entity's cost level.
The information to be collected in Legal Due DiligenceThe information to be collected in Legal Due Diligence
includes:includes:
•• Names and addresses of the company's attorneysNames and addresses of the company's attorneys
•• Is a discussion with them appropriate, warranted?Is a discussion with them appropriate, warranted?
•• Make inquiries of the company's management andMake inquiries of the company's management and
attorney regarding possible lawsuits, contract problems,attorney regarding possible lawsuits, contract problems,
etc.etc.
•• Does the Company have good legal records? If not, whyDoes the Company have good legal records? If not, why
not? Assess the implications.not? Assess the implications.
•• Make inquiries of the company's management and legalMake inquiries of the company's management and legal
concerning the likelihood of an unfavorable law suits.concerning the likelihood of an unfavorable law suits.
Assess the implications to the extent there might be legalAssess the implications to the extent there might be legal
problems, the company's investment risk might beproblems, the company's investment risk might be
significantly higher.significantly higher.
Legal Due diligence ChecklistLegal Due diligence Checklist
before Amalgamationbefore Amalgamation
24. RASU SHARMA
rasu@lexport.in
• There are various forms which are required to be filled upThere are various forms which are required to be filled up
for the purpose of fulfilling all the requirements applicablefor the purpose of fulfilling all the requirements applicable
for filing applications / petition relating to Amalgamation.for filing applications / petition relating to Amalgamation.
• The details of all these forms are given under the CompaniesThe details of all these forms are given under the Companies
(Court) Rules, 1959. Below is the list of such applicable(Court) Rules, 1959. Below is the list of such applicable
forms:forms:
List of forms under CompaniesList of forms under Companies
(Court) Rules, 1959(Court) Rules, 1959
Form No.Form No. PurposePurpose
Form 33 Summons for Directions to Convene a Meeting under
section 391
Form 34 Affidavit in Support of Summons
Form 35 Order on Summons for Directions
25. RASU SHARMA
rasu@lexport.in
List of forms under CompaniesList of forms under Companies
(Court) Rules, 1959(Court) Rules, 1959
Form No.Form No. PurposePurpose
Form 36 Notice convening Meeting
Form 37 Form of Proxy
Form 38 Advertisement of the Notice Convening Meeting of
Creditors/shareholder, etc.
Form 39 Report by Chairman
Form 40 Petition to sanction compromise or arrangement
Form 41 Order on petition
Form 42 Order under section 394
26. RASU SHARMA
rasu@lexport.in
There are number of authorities and persons involved asThere are number of authorities and persons involved as
required by the statute and specialized nature of activity to berequired by the statute and specialized nature of activity to be
carried out. The tasks categorized in stages like framing,carried out. The tasks categorized in stages like framing,
sanctioning and implementation of the scheme of amalgamationsanctioning and implementation of the scheme of amalgamation
among such authorities.among such authorities.
These authorities and persons involved are categorized underThese authorities and persons involved are categorized under
the following heads:the following heads:
1.1.Judiciary;Judiciary;
2.2.Government; andGovernment; and
3. Professionals.3. Professionals.
Authorities involved inAuthorities involved in
AmalgamationAmalgamation
27. RASU SHARMA
rasu@lexport.in
1.1. Judiciary:Judiciary:
•• High Court of the State where Registered Offices ofHigh Court of the State where Registered Offices of
Companies involved in Amalgamation are situated.Companies involved in Amalgamation are situated.
2.2. Government Authority:Government Authority:
•• Registrar of Companies/ Company Law BoardRegistrar of Companies/ Company Law Board
•• Official LiquidatorsOfficial Liquidators
•• Regional DirectorRegional Director
•• Central GovernmentCentral Government
•• Authorities under respective statutes whose permission /Authorities under respective statutes whose permission /
approval is required in the course of Amalgamation.approval is required in the course of Amalgamation.
Authorities involved inAuthorities involved in
AmalgamationAmalgamation
29. RASU SHARMA
rasu@lexport.in
There are number of meetings required to be convened beforeThere are number of meetings required to be convened before
and after the Amalgamation. Below are the meetings required toand after the Amalgamation. Below are the meetings required to
be convened:be convened:
BOARD MEETINGSBOARD MEETINGS
1st Board Meeting:1st Board Meeting: The Company (both transferor andThe Company (both transferor and
transferee) should convene a board meeting and pass thetransferee) should convene a board meeting and pass the
following resolutions in that meeting:following resolutions in that meeting:
•• Approval of the proposal for Amalgamation.Approval of the proposal for Amalgamation.
•• Appoint valuers, lawyers, solicitors & consultantsAppoint valuers, lawyers, solicitors & consultants
etc.etc.
•• Obtain due diligence certificate, if required.Obtain due diligence certificate, if required.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
30. RASU SHARMA
rasu@lexport.in
BOARD MEETINGSBOARD MEETINGS
2nd Board Meeting:2nd Board Meeting: Once the Companies get the draft schemeOnce the Companies get the draft scheme
of Amalgamation, board should convene another board meetingof Amalgamation, board should convene another board meeting
& get the following resolutions approved:& get the following resolutions approved:
•• Approval of Draft Scheme of AmalgamationApproval of Draft Scheme of Amalgamation
•• Approval of Exchange Ratio & Appointed DateApproval of Exchange Ratio & Appointed Date
•• Appointment of Counsel to make representationAppointment of Counsel to make representation
in Highin High CourtCourt
•• Authorizing one Director / Officer to signAuthorizing one Director / Officer to sign
Petition /Petition / Application on behalf of the CompanyApplication on behalf of the Company
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
31. RASU SHARMA
rasu@lexport.in
BOARD MEETINGSBOARD MEETINGS
3rd Board Meeting:3rd Board Meeting: The board of the transferee CompanyThe board of the transferee Company
should take steps to call extraordinary general meeting (EGM) toshould take steps to call extraordinary general meeting (EGM) to
approve the following:approve the following:
•• Allotment of shares to other than presentAllotment of shares to other than present
shareholdersshareholders in terms of Section 62 of the Companies Act,in terms of Section 62 of the Companies Act,
20132013 (earlier Sec 81(1A) of the Companies Act, 1956).(earlier Sec 81(1A) of the Companies Act, 1956).
•• Increase in share capital or change in capitalIncrease in share capital or change in capital
structurestructure of authorized capital, if required.of authorized capital, if required.
•• Change in Object Clause or Name Clause of theChange in Object Clause or Name Clause of the
MOA, ifMOA, if required.required.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
32. RASU SHARMA
rasu@lexport.in
BOARD MEETINGSBOARD MEETINGS
4th Board Meeting:4th Board Meeting: Once all concerned approves proposedOnce all concerned approves proposed
Amalgamation, the Companies should take Amalgamation onAmalgamation, the Companies should take Amalgamation on
record and also complete all the formalities, as this will be therecord and also complete all the formalities, as this will be the
last board meeting in the case of Transferor Company. Followinglast board meeting in the case of Transferor Company. Following
are the steps to be taken:are the steps to be taken:
•• In case of Transferor Company:In case of Transferor Company: The boardThe board
approvesapproves accounts.accounts.
•• In case of Transferee Company:In case of Transferee Company: In case ofIn case of
TransfereeTransferee Company the board should pass resolutionCompany the board should pass resolution
makingmaking allotment of shares to the shareholders of theallotment of shares to the shareholders of the
TransferorTransferor Company(ies) as per the swap ratio.Company(ies) as per the swap ratio.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
33. RASU SHARMA
rasu@lexport.in
SHAREHOLDERS’ MEETINGSHAREHOLDERS’ MEETING
•If the Honorable High Court directs to the CompaniesIf the Honorable High Court directs to the Companies
(Transferor & Transferee) proposing Amalgamation, to call(Transferor & Transferee) proposing Amalgamation, to call
shareholders’ meeting, then said meeting should be called asshareholders’ meeting, then said meeting should be called as
per the direction of the Court after getting approved all theper the direction of the Court after getting approved all the
documents by the Courtdocuments by the Court i.e.i.e. mode of service of notice, quorum,mode of service of notice, quorum,
venue & time, appointment of chairman, name of paper invenue & time, appointment of chairman, name of paper in
which the notice of meeting was published.which the notice of meeting was published.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
34. RASU SHARMA
rasu@lexport.in
SHAREHOLDERS’ MEETINGSHAREHOLDERS’ MEETING
•Here Special Resolution should be passed to approve theHere Special Resolution should be passed to approve the
Amalgamation (it may be noted that approval has to be in fullAmalgamation (it may be noted that approval has to be in full
and cannot be approved in part) and voting is by way of ballotand cannot be approved in part) and voting is by way of ballot
and for approval 75% in value terms and 51% in number termsand for approval 75% in value terms and 51% in number terms
should vote in favor of the resolution.should vote in favor of the resolution.
•At the meeting, question answer session should be conductedAt the meeting, question answer session should be conducted
& conduct the voting for the resolution of the approval of the& conduct the voting for the resolution of the approval of the
scheme & get the special resolution passed.scheme & get the special resolution passed.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
35. RASU SHARMA
rasu@lexport.in
SHAREHOLDERS’ MEETINGSHAREHOLDERS’ MEETING
Transferee CompanyTransferee Company may conduct any other Extra-ordinarymay conduct any other Extra-ordinary
General Meeting to approve the following:General Meeting to approve the following:
•Increase in share capital or change in capital structure ofIncrease in share capital or change in capital structure of
authorized capital.authorized capital.
•Special resolution authorizing director for issuing shares otherSpecial resolution authorizing director for issuing shares other
than existing shareholders.than existing shareholders.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
36. RASU SHARMA
rasu@lexport.in
MEETING OF CREDITORS OF COMPANIESMEETING OF CREDITORS OF COMPANIES
If the Honorable High Court directs to the companiesIf the Honorable High Court directs to the companies
(Transferor & Transferee) proposing Amalgamation to call(Transferor & Transferee) proposing Amalgamation to call
meeting of the Secured & Unsecured Creditors, then saidmeeting of the Secured & Unsecured Creditors, then said
meeting should be called as per the direction of the Court aftermeeting should be called as per the direction of the Court after
getting all the documents approved by the Courtgetting all the documents approved by the Court i.e.i.e.
•mode of service of notice,mode of service of notice,
•quorum,quorum,
•venue & time,venue & time,
•appointment of chairman,appointment of chairman,
•name of paper in which the notice of meeting was published.name of paper in which the notice of meeting was published.
Number of Meetings forNumber of Meetings for
AmalgamationAmalgamation
37. RASU SHARMA
rasu@lexport.in
The documentation in Amalgamation can be divided into twoThe documentation in Amalgamation can be divided into two
partsparts viz.viz.
(A)(A) Documents required for Statutory RequirementsDocuments required for Statutory Requirements
(B)(B) Documents required by various PartiesDocuments required by various Parties
Documentation inDocumentation in
AmalgamationAmalgamation
38. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
1.1. Scheme of Amalgamation:Scheme of Amalgamation: The Scheme ofThe Scheme of
Amalgamation is basically a contract between two companiesAmalgamation is basically a contract between two companies
and the basis of the whole restructuring process. The schemeand the basis of the whole restructuring process. The scheme
has to be submitted to all authorities with other documentshas to be submitted to all authorities with other documents
required.required.
Clauses of the Scheme of AmalgamationClauses of the Scheme of Amalgamation:: A Scheme normallyA Scheme normally
contains the following clauses:contains the following clauses:
•• Definition ClauseDefinition Clause providing definitions of Transferor andproviding definitions of Transferor and
Transferee Company,Transferee Company, Appointed date, Effective date,Appointed date, Effective date,
Undertaking etc.Undertaking etc.
Documentation inDocumentation in
AmalgamationAmalgamation
39. RASU SHARMA
rasu@lexport.in
(A)(A)Documents required for Statutory RequirementsDocuments required for Statutory Requirements
•• Share Capital ClauseShare Capital Clause giving details of share capital ofgiving details of share capital of
both the Companies.both the Companies.
•• Assets and Liabilities ClauseAssets and Liabilities Clause giving details of assets andgiving details of assets and
liabilities getting transferred.liabilities getting transferred.
•• Clause giving details ofClause giving details of ConsiderationConsideration to be discharged &to be discharged &
Exchange RatioExchange Ratio..
•• Clause giving details of obligations / liabilities underClause giving details of obligations / liabilities under
Contracts, Deeds, Bonds, Trade marks & other instrumentsContracts, Deeds, Bonds, Trade marks & other instruments
getting transferred.getting transferred.
Documentation inDocumentation in
AmalgamationAmalgamation
40. RASU SHARMA
rasu@lexport.in
(A)(A)Documents required for Statutory RequirementsDocuments required for Statutory Requirements
•• Pending Legal proceedings.Pending Legal proceedings.
•• Treatment of reserves in the books of Transferee Company.Treatment of reserves in the books of Transferee Company.
•• Restrictions on Transferor Company to do business untilRestrictions on Transferor Company to do business until
the Effective Date.the Effective Date.
•• Clause giving details of:Clause giving details of:
(a)(a) operative date of the scheme;operative date of the scheme;
(b)(b) provisions for Transferor Company's staff,provisions for Transferor Company's staff,
workmen andworkmen and employees and terms of their employment inemployees and terms of their employment in
TransfereeTransferee Company.Company.
•• Scheme should provide for continuity of service ofScheme should provide for continuity of service of
employees of Transferor Company and terms should not be lessemployees of Transferor Company and terms should not be less
favorable than their existing terms of employmentfavorable than their existing terms of employment
Documentation inDocumentation in
AmalgamationAmalgamation
41. RASU SHARMA
rasu@lexport.in
(A)(A)Documents required for Statutory RequirementsDocuments required for Statutory Requirements
•• Clause giving details of:Clause giving details of:
(a)(a) Expenses incurred to be borne by whichExpenses incurred to be borne by which
CompanyCompany
(b)(b) Any other details required to be disclosed withAny other details required to be disclosed with
thethe scheme.scheme.
(c)(c) Some special information relating to the schemeSome special information relating to the scheme
Documentation inDocumentation in
AmalgamationAmalgamation
42. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
2.2. Application:Application: The All the companies involved areThe All the companies involved are
required to make an application to the Highrequired to make an application to the High Court toCourt to
obtain directions for holding meetings of various shareholders &obtain directions for holding meetings of various shareholders &
creditors or dispensation thereof for approval of the scheme. Thecreditors or dispensation thereof for approval of the scheme. The
format of the Application is given informat of the Application is given in Form No 33Form No 33 of theof the
Company (Court) Rules, 1959.Company (Court) Rules, 1959.
Contents of the ApplicationContents of the Application:: The application contains theThe application contains the
following:following:
•• Name of the Transferor/Transferee CompanyName of the Transferor/Transferee Company
•• Name of DirectorsName of Directors
•• Share capital – (Authorized, Issued and Paid up)Share capital – (Authorized, Issued and Paid up)
Documentation inDocumentation in
AmalgamationAmalgamation
43. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
•• Address of Registered OfficeAddress of Registered Office
•• Date of incorporationDate of incorporation
•• Date of commencement of businessDate of commencement of business
•• Latest Audited Balance Sheet (as Annexure)Latest Audited Balance Sheet (as Annexure)
•• Scheme of arrangement with creditorsScheme of arrangement with creditors
•• Copy of scheme of Amalgamation (as Annexure)Copy of scheme of Amalgamation (as Annexure)
•• Prayer for holding meetings of shareholders andPrayer for holding meetings of shareholders and
creditorscreditors
•• The Companies may also pray for not holding theThe Companies may also pray for not holding the
meeting of shareholders / creditors, as the case may be, if allmeeting of shareholders / creditors, as the case may be, if all
such shareholders/creditors have given their NOC for suchsuch shareholders/creditors have given their NOC for such
Amalgamation.Amalgamation.
Documentation inDocumentation in
AmalgamationAmalgamation
44. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
3.3. Court's Order on Application:Court's Order on Application: The High Court to whichThe High Court to which
application is made for seekingapplication is made for seeking permission to file thepermission to file the
petition passes an order either allowing or rejecting thepetition passes an order either allowing or rejecting the
application. The format of Order is given inapplication. The format of Order is given in Form No 35Form No 35..
Contents of the OrderContents of the Order:: The Court’s order shall contain theThe Court’s order shall contain the
following:following:
•• That the MOA of the Companies involved hasThat the MOA of the Companies involved has
Amalgamation as an Object.Amalgamation as an Object.
•• That Scheme of Amalgamation has beenThat Scheme of Amalgamation has been
approved by theapproved by the Board of Directors of respectiveBoard of Directors of respective
Companies &Companies & Advertisement of the same has been given.Advertisement of the same has been given.
Documentation inDocumentation in
AmalgamationAmalgamation
45. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
•• That Prayer has been made for the transfer ofThat Prayer has been made for the transfer of
specificspecific assets.assets.
•• That parties have informed the Court about theThat parties have informed the Court about the
consideration of transfer.consideration of transfer.
•• That confirmations of Scheme have been takenThat confirmations of Scheme have been taken
considering the interests of all the shareholders, theconsidering the interests of all the shareholders, the
members, creditors etc.members, creditors etc.
•• That Prayer for dispensation of meeting is madeThat Prayer for dispensation of meeting is made
(if(if confirmation from shareholders, secured / unsecuredconfirmation from shareholders, secured / unsecured
creditors has already been taken); orcreditors has already been taken); or
Documentation inDocumentation in
AmalgamationAmalgamation
46. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
•• Conveying the meeting of different class ofConveying the meeting of different class of
shareholders/creditors;shareholders/creditors;
•• Decide upon the time, place, and chairperson of theDecide upon the time, place, and chairperson of the
meeting;meeting;
•• Publication of notices in two languages. One inPublication of notices in two languages. One in
English &English & the other in a vernacular language & also in thethe other in a vernacular language & also in the
Govt.Govt. Gazette.Gazette.
Documentation inDocumentation in
AmalgamationAmalgamation
47. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
4.4. Petition:Petition: After complying with various directions issuedAfter complying with various directions issued
by the Honorable High Court, and after the scheme is approvedby the Honorable High Court, and after the scheme is approved
by all of the concerned parties, the Companies are required toby all of the concerned parties, the Companies are required to
file petition to the Court. This petition is in Form No 40.file petition to the Court. This petition is in Form No 40.
Contents of the PetitionContents of the Petition:: The contents of the petition are asThe contents of the petition are as
follows:follows:
•• Appointed DateAppointed Date
•• Registered OfficeRegistered Office
•• Date of incorporationDate of incorporation
•• Share Capital - Authorized, Issued and Paid upShare Capital - Authorized, Issued and Paid up
•• Objects of the Petitioner Company(ies)Objects of the Petitioner Company(ies)
Documentation inDocumentation in
AmalgamationAmalgamation
48. RASU SHARMA
rasu@lexport.in
(A) Documents required for Statutory Requirements(A) Documents required for Statutory Requirements
•• Appointed DateAppointed Date
•• Details of shareholders and creditors meetingsDetails of shareholders and creditors meetings
heldheld
•• Prayer for sanctioning the schemePrayer for sanctioning the scheme
•• Copy of Memorandum and Articles of Association ofCopy of Memorandum and Articles of Association of
Transferor and Transferee CompaniesTransferor and Transferee Companies
•• Copy of Audited Accounts of Transferor andCopy of Audited Accounts of Transferor and
TransfereeTransferee CompaniesCompanies
•• Scheme of amalgamationScheme of amalgamation
•• Copy of Chairman's ReportCopy of Chairman's Report
Documentation inDocumentation in
AmalgamationAmalgamation
49. RASU SHARMA
rasu@lexport.in
(B) Documents required for Various Parties(B) Documents required for Various Parties
1.1. For the High Court:For the High Court:
Documentation inDocumentation in
AmalgamationAmalgamation
I. With Application (first motion) II. With Petition (second
motion)
• Application (Summons for directions in Form No.
33)
• Director's Affidavit (Form No. 34)
• Vakalatnama
• Memorandum of registered office address
• Copy of MOA & AOA (both Companies)
• Balance sheet & Profit & Loss Account of Both
Companies
• Scheme of Amalgamation
• Confirmations / NOC of creditors (Secured &
Unsecured) [Transferor Company(ies) may also
enclose, if possible, to avoid their meetings]
• Summons for direction to convene the meeting of
the members of the transferor & transferee
Companies to approve of the Scheme(Form No.
35)
• Minutes of order
• Petition (Form No. 40)
• Vakalatnama
• Copy of Balance Sheet & Profit
& Loss A/c
• Memorandum of registered
office address
• Copy of MOA & AOA ( both
companies )
• Scheme of Amalgamation with
explanatory statement u/s 393
• Valuation Report for exchange
ratio
• Chairman's Report (Form 39)
• Director's Affidavit
• Copy of Court order on First
Motion Application (Form 35)
50. RASU SHARMA
rasu@lexport.in
(B) Documents required for Various Parties(B) Documents required for Various Parties
2.2. For Shareholders:For Shareholders:
•• Notice convening the meeting of the Equity ShareholdersNotice convening the meeting of the Equity Shareholders
specifying therein date, time and place of meeting and name ofspecifying therein date, time and place of meeting and name of
person appointed as chairman or alternate chairman by theperson appointed as chairman or alternate chairman by the
Court (to be given 21 clear days before the meeting under theCourt (to be given 21 clear days before the meeting under the
authority of chairman appointed by Court through certificate ofauthority of chairman appointed by Court through certificate of
posting).posting).
•• Form of ProxyForm of Proxy
•• Copy of Scheme of AmalgamationCopy of Scheme of Amalgamation
•• Explanatory statements pursuant to Sec 393 of theExplanatory statements pursuant to Sec 393 of the
Companies Act, 1956 including details of shareholding ofCompanies Act, 1956 including details of shareholding of
directors of both the companies in both the companiesdirectors of both the companies in both the companies
Documentation inDocumentation in
AmalgamationAmalgamation
51. RASU SHARMA
rasu@lexport.in
(B) Documents required for Various Parties(B) Documents required for Various Parties
3.3. For Official Liquidator:For Official Liquidator:
•• Notice of petition with all enclosures to be served onNotice of petition with all enclosures to be served on
official Liquidator by Transferorofficial Liquidator by Transferor Company and on ROC byCompany and on ROC by
both Companies.both Companies.
•• All details required to be furnished are as required byAll details required to be furnished are as required by
the questionnaire issued upon the Company. Some of them arethe questionnaire issued upon the Company. Some of them are
as under:as under:
(i) Whether the Company has complied with all the(i) Whether the Company has complied with all the
formalities as required to be done under the law.formalities as required to be done under the law.
(ii) Whether all details with regard to documentation(ii) Whether all details with regard to documentation
havehave been filed with the R.O.C. etc.been filed with the R.O.C. etc.
Documentation inDocumentation in
AmalgamationAmalgamation
52. RASU SHARMA
rasu@lexport.in
(B) Documents required for Various Parties(B) Documents required for Various Parties
4.4. For Registrar of Companies:For Registrar of Companies:
Documentation inDocumentation in
AmalgamationAmalgamation
After Merger/amalgamation is
approved
•• Copy of application and petition shouldCopy of application and petition should
be filed with R.O.C.be filed with R.O.C.
•• R.O.C. looks into whether allR.O.C. looks into whether all
requirements are complied and if notrequirements are complied and if not
satisfied it can file affidavit in the courtsatisfied it can file affidavit in the court
stating its objections, otherwise gives itsstating its objections, otherwise gives its
NOC.NOC.
•• Copy of Order sanctioned by theCopy of Order sanctioned by the
Hon'ble High Court.Hon'ble High Court.
•• Scheme of Amalgamation.Scheme of Amalgamation.
•• Changed MOA & AOA (amendedChanged MOA & AOA (amended
through Scheme)through Scheme)
•• Any other document which has to beAny other document which has to be
filed as per the requirements of thefiled as per the requirements of the
Companies Act, 1956 or Companies Act,Companies Act, 1956 or Companies Act,
20132013 i.e.i.e. if, say, change of name orif, say, change of name or
change in object clause is also being donechange in object clause is also being done
at the same time then procedure for theat the same time then procedure for the
same etc.same etc.
53. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to followed by the Transferee
Company and Transferor Company
1.1. Memorandum ofMemorandum of
Association (Association (MOAMOA))
The MOA must provide the power to amalgamate inThe MOA must provide the power to amalgamate in
its Objects Clause. If MOA is silent, amendment theits Objects Clause. If MOA is silent, amendment the
MOA to add Amalgamation as an object.MOA to add Amalgamation as an object.
2.2. Board MeetingBoard Meeting Board Meeting shall be convened to consider andBoard Meeting shall be convened to consider and
pass the following requisite resolutions:pass the following requisite resolutions:
- to approve the draft scheme of amalgamation;to approve the draft scheme of amalgamation;
- to give authorization for filing of application to the- to give authorization for filing of application to the
Court for directions to convene a general meeting;Court for directions to convene a general meeting;
- to file a petition for confirmation of Scheme by the- to file a petition for confirmation of Scheme by the
High Court.High Court.
54. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
3.3. Application to theApplication to the
CourtCourt
An application shall be made to the Court forAn application shall be made to the Court for
directions to convene a general meeting by way ofdirections to convene a general meeting by way of
Judge's summons supported by an affidavit.Judge's summons supported by an affidavit.
The proposed Scheme of amalgamation must beThe proposed Scheme of amalgamation must be
attached to such affidavit.attached to such affidavit.
SummonsSummons - Form No. 33- Form No. 33
AffidavitAffidavit - Form No. 34- Form No. 34
The summons should be accompanied by:The summons should be accompanied by:
(i) A certified copy of the MOA of both companies(i) A certified copy of the MOA of both companies
(ii) A certified true copy of the latest audited B/S and(ii) A certified true copy of the latest audited B/S and
P&L A/c of transferee companyP&L A/c of transferee company
55. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
4.4. Copy To RegionalCopy To Regional
DirectorDirector
A copy of application made to concerned HC shallA copy of application made to concerned HC shall
also be sent to the R.D. of the region.also be sent to the R.D. of the region.
(Although, such notice is supposed to be sent by the(Although, such notice is supposed to be sent by the
HC, usually the company sends it without waiting forHC, usually the company sends it without waiting for
the HC to send it).the HC to send it).
5.5. Order of HighOrder of High
CourtCourt
On hearing of the summons, the HC shall pass theOn hearing of the summons, the HC shall pass the
necessary orders which shall include:necessary orders which shall include:
Time and place of the meeting;Time and place of the meeting;
Chairman of the meeting;Chairman of the meeting;
Fixing the quorum;Fixing the quorum;
Procedure to be followed in the meeting for voting byProcedure to be followed in the meeting for voting by
the proxy;the proxy;
Advertisement of notice of the meeting;Advertisement of notice of the meeting;
Time limit for the chairman to submit the report toTime limit for the chairman to submit the report to
the court regarding the result of the meeting.the court regarding the result of the meeting.
Orders inOrders in - Form No. 35- Form No. 35
56. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
6.6. Notice of theNotice of the
MeetingMeeting
The notice of the meeting (Form No. 36) shall be sentThe notice of the meeting (Form No. 36) shall be sent
to the creditors and/or to the shareholdersto the creditors and/or to the shareholders
individually by the chairman so appointed byindividually by the chairman so appointed by
registered post enclosing:registered post enclosing:
(i) A statement setting forth the following:(i) A statement setting forth the following:
- Terms of amalgamation and its effects- Terms of amalgamation and its effects
- Any material interests of the director, MDs or- Any material interests of the director, MDs or
Manager, in any capacityManager, in any capacity
-Effect of the arrangement on those interests.Effect of the arrangement on those interests.
(ii) A copy of the proposed scheme of amalgamation(ii) A copy of the proposed scheme of amalgamation
(iii) A form of proxy (Form No. 37)(iii) A form of proxy (Form No. 37)
(iv) Attendance slip(iv) Attendance slip
(v) Notice of the resolution for authorizing issue of(v) Notice of the resolution for authorizing issue of
shares to persons other than existing shareholders.shares to persons other than existing shareholders.
57. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
7.7. Advertisement ofAdvertisement of
Notice of MeetingNotice of Meeting
The notice of the meeting shall be advertised in anThe notice of the meeting shall be advertised in an
English and Hindi Newspaper as the Court direct.English and Hindi Newspaper as the Court direct.
Advertisement inAdvertisement in - Form No. 38- Form No. 38
8.8. Filing of AffidavitFiling of Affidavit
for the Compliancefor the Compliance
An affidavit not less than 7 days before the meetingAn affidavit not less than 7 days before the meeting
shall be filed by the Chairman of the meeting with theshall be filed by the Chairman of the meeting with the
Court showing that the directions regarding the issueCourt showing that the directions regarding the issue
of notices and advt. have been duly complied with.of notices and advt. have been duly complied with.
9.9. General MeetingGeneral Meeting The General Meeting shall be held to pass theThe General Meeting shall be held to pass the
following resolutions:following resolutions:
(i)(i) Approving the scheme of amalgamation by ¾thApproving the scheme of amalgamation by ¾th
majoritymajority
58. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
(ii)(ii) Special Resolution authorizing allotment of sharesSpecial Resolution authorizing allotment of shares
to persons other than existing shareholders or anto persons other than existing shareholders or an
ordinary resolution be passed subject to gettingordinary resolution be passed subject to getting
Central Government's approval for the allotment asCentral Government's approval for the allotment as
per the provisions of Section 62 of the Companiesper the provisions of Section 62 of the Companies
Act, 2013 (earlier Section 81(1A) of the CompaniesAct, 2013 (earlier Section 81(1A) of the Companies
Act, 1956).Act, 1956).
(iii)(iii) The resolution to empower directors to dispose ofThe resolution to empower directors to dispose of
the shares not taken up by the dissentingthe shares not taken up by the dissenting
shareholders at their discretion.shareholders at their discretion.
(iv)(iv) An ordinary/special resolution shall be passed toAn ordinary/special resolution shall be passed to
increase the Authorized share capital, if the proposedincrease the Authorized share capital, if the proposed
issue of shares exceeds the present authorizedissue of shares exceeds the present authorized
capital.capital.
Note:Note: The decision of the meeting shall beThe decision of the meeting shall be
ascertained only by taking a poll on the resolutions.ascertained only by taking a poll on the resolutions.
59. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
10.10. Reporting ofReporting of
Result of theResult of the
MeetingMeeting
The Chairman of the meeting shall report the resultThe Chairman of the meeting shall report the result
thereof to the Court within the time fixed by the judgethereof to the Court within the time fixed by the judge
or within 7 days, as the case may be.or within 7 days, as the case may be.
Report inReport in - Form No. 39- Form No. 39
11.11. Formalities withFormalities with
RoCRoC
The following documents shall be filed with ROCThe following documents shall be filed with ROC
along with the requisite filing fees:along with the requisite filing fees:
Form No. MGT-14 of Companies (Management andForm No. MGT-14 of Companies (Management and
Administration) Rules, 2014 +Administration) Rules, 2014 +
(i) Copy of Special Resolution(i) Copy of Special Resolution
(ii) Resolution approving the scheme of amalgamation(ii) Resolution approving the scheme of amalgamation
(iii) Special resolution passed for the issue of shares(iii) Special resolution passed for the issue of shares
to persons other than existing shareholdersto persons other than existing shareholders (no need(no need
in case of Transferor Company (ies).in case of Transferor Company (ies).
60. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
12.12. PetitionPetition For approval of the scheme of amalgamation, aFor approval of the scheme of amalgamation, a
petition shall be made to the HC within 7 days of thepetition shall be made to the HC within 7 days of the
filing of report by the chairman.filing of report by the chairman.
Report inReport in - Form No. 40- Form No. 40
Note:Note: If the Regd. Offices of the companies are inIf the Regd. Offices of the companies are in
same state - then both the companies may movesame state - then both the companies may move
jointly to the High Court.jointly to the High Court.
If the Regd. Offices of the Companies are in differentIf the Regd. Offices of the Companies are in different
states - then each Company shall move the petition instates - then each Company shall move the petition in
the respective High Court for directions.the respective High Court for directions.
61. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
13.13. Sanction of theSanction of the
SchemeScheme
The Court shall sanction the scheme and pass theThe Court shall sanction the scheme and pass the
Orders, on being satisfied that:Orders, on being satisfied that:
(i) The whole scheme is annexed to the notice for(i) The whole scheme is annexed to the notice for
convening meeting, (this provision is mandatory inconvening meeting, (this provision is mandatory in
nature).nature).
(ii) The scheme has been approved by the company by(ii) The scheme has been approved by the company by
means of ¾th majority of the members present.means of ¾th majority of the members present.
(iii) The scheme is genuine and bona fide and not(iii) The scheme is genuine and bona fide and not
against the interests of the creditors, the companyagainst the interests of the creditors, the company
and the public interest.and the public interest.
Orders inOrders in - Form No. 41- Form No. 41
62. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
14.14. Stamp DutyStamp Duty A scheme sanctioned by the court is an instrumentA scheme sanctioned by the court is an instrument
liable to stamp duty.liable to stamp duty.
15.15. Filing with RoCFiling with RoC The following documents shall be filed with ROCThe following documents shall be filed with ROC
within 30 days of order:within 30 days of order:
(i)(i)Form No. INC-28 (Notice of order of the Court orForm No. INC-28 (Notice of order of the Court or
other authority) of Companies (Incorporation) Rules,other authority) of Companies (Incorporation) Rules,
2014.2014.
(ii)(ii)A certified true copy of Court's OrderA certified true copy of Court's Order
63. RASU SHARMA
rasu@lexport.in
The procedural steps in Amalgamation are as under:The procedural steps in Amalgamation are as under:
Steps for AmalgamationSteps for Amalgamation
Sr. No. Points to look
into
Steps to be followed by the Transferee
Company and Transferor Company
16.16. Copy of Order toCopy of Order to
be Annexed tobe Annexed to
every copy of MOAevery copy of MOA
A copy of court's order shall be annexed to every copyA copy of court's order shall be annexed to every copy
of the Memorandum of Association issued after theof the Memorandum of Association issued after the
certified copy of the order has been filed with ascertified copy of the order has been filed with as
aforesaid.aforesaid.
17.17. Allotment ofAllotment of
SharesShares
A Board Resolution shall be passed for the allotmentA Board Resolution shall be passed for the allotment
of shares to the shareholders in exchange of sharesof shares to the shareholders in exchange of shares
held in the Transferor Company and to fix the recordheld in the Transferor Company and to fix the record
date for this purpose.date for this purpose.