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Scheme of Chapter XV
The provisions relating to amalgamation, mergers, de-mergers, arrangements
and compromises are provided under Chapter XV
1. Section 230-231 deals with compromise or arrangements.
2. Section 232 deals with mergers and amalgamation including demergers.
3. Section 233 deals with amalgamation of small companies (also called
fast track mergers)
4. Section 234 deals with amalgamation with foreign company (also called
cross border mergers)
5. Section 235 deals acquisition of shares of dissenting shareholders.
6. Section 236 deals with purchase of minority shareholding.
7. Section 237 deals with power of central government to provide for
amalgamation of companies in public interest.
8. Section 238 deals with registration of offer of schemes involving transfer
of shares.
9. Section 239 deals with preservation of books and papers of amalgamated
companies.
10. Section 240 deals with liability of officers in respect of offences
committed prior to merger, amalgamation etc.,
Compromise or Arrangement:
Meaning
Earlier provided in Sections 391, 393 & 394A of 1956 Act, now in Section 230 of the 2013 Act.
Definition is inclusive and very wide.
Section 230 is a complete code in itself which provides single application system for
compromise and arrangement.
S. 230 - Includes debt restructuring, reorganization of companys share capital by
consolidation of shares of different classes or by division of shares into shares of different
classes. Buy back or conversion of equity into preferential or vice versa. Demerger, takeover
(230(11)) etc.
It may include re-organization of share and loan capital, modification of rights of
shareholders, reduction of capital and conversion into unsecured loans (Al-Ahali Business
Trade Links P. Ltd. , In re (2011))
It doesnt include revaluation of asset (u/s 129) as it is pure and simple accounting process
and doesnt involve parties like creditors and members.
Mandatory requirement complete compliance of section is required, not substantial.
Voting
Absence in meeting shall be
considered as implied consent.
Process of voting to be completed at
once not in stages.
Only creditors whose name appears
in companys book as creditor may
vote.
Majority of 3/4th of the present voters
as u/230(6)
Content of application
(a) all material facts relating to the company, such as the latest financial position
of the company, the latest auditors report on the accounts of the company and
the pendency of any investigation or proceedings against the company;
(b) reduction of share capital of the company, if any, included in the compromise
or arrangement;
(c) any scheme of corporate debt restructuring consented to by not less than
seventy-five per cent. of the secured creditors in value, including
(i) a creditors responsibility statement in the prescribed form;
(ii) safeguards for the protection of other secured and unsecured creditors;
(iii)report by the auditor that the fund requirements of the company after the
corporate debt restructuring as approved shall conform to the liquidity test
based upon the estimates provided to them by the Board;
(iv)where the company proposes to adopt the corporate debt restructuring
guidelines specified by the Reserve Bank of India, a statement to that effect;
and
(v) a valuation report in respect of the shares and the property and all assets,
tangible and intangible, movable and immovable, of the company by a
registered valuer.