Merger and Amalgamation – Key steps

 Considering proposal for Merger and Amalgamation by BOD’s

 Finalization of Scheme of Amalgamation, Valuation and Fairness Opinion
 Recommendation on Scheme and Valuation report by the Audit committee
 Approval of the Scheme and Valuation Report by BOD’s
 Filing of Scheme, Valuation report and Fairness Opinion with the designated Stock
Exchanges for SEBI approval, if Co. is listed
 Filing of Application to NCLT (Disclosure through affidavit if reduction of share capital is
part of scheme)
 On direction of NCLT, Notice of meeting and copy of Valuation report has to be sent to
Shareholders, Creditors, IT, SEBI, ROC, respective stock exchange
 (* Notice shall also provide an option to vote through postal ballot)
 Prepare the Scheme of Amalgamation
 File the Scheme with NCLT
 Copy of Scheme
 • Disclosure of Material Fact
 • Latest Financial Statements
 • Latest Audit Report
 • Declaration of Pendency of any investigation
 Hearing of the application at the Tribunal
 NCLT to direct for Class meeting of Members and Creditors

 Fix the Time & Place of meeting

 • Appoint Chairperson & Scrutinizer
 • Fix Quorum & Procedure to be followed
 NOTICE OF MEETING
 EXPLANATORY STATEMENT + COPY OF SCHEME + SUMMARY OF VALUATION
REPORT

 PUBLISH ADVERTISEMENT ( ATLEAST 30DAYS BEFORE THE DATE OF

MEETING)
 Objections to be considered only if it is by
 MEMBERS MORE THAN 10% SHARES
 CREDITORS MORE THAN 5 % TOTAL DEBT
 Convening of Shareholders and Creditors Meetings for approval of Scheme and
discussion on the representation given by regulatory authorities – decision reported
to NCLT (If creditors having at least 90% value agree and confirm by way of
affidavit to the scheme, then NCLT may dispense with creditors meeting.)
 Notice to Regional Director and Official Liquidator and submission of their NOC
with NCLT
 Final Hearing by NCLT
 Obtaining NCLT Order and filing with Registrar of Companies(NCLT may provide
exit opportunity to the dissenting shareholders)
 Post Merger compliances
Amalgamation

 Amalgamation, in relation to companies, means the merger of one or more

companies with another company or the merger of two or more companies to form
one company in such a manner that—
 all the property of the amalgamating company or companies immediately before the
amalgamation becomes the property of the amalgamated company by virtue of the
amalgamation ;
 all the liabilities of the amalgamating company or companies immediately before the
amalgamation become the liabilities of the amalgamated company by virtue of the
amalgamation
 Small Co. Holding Co.

Small Co. Wholly Owned Subsidiary

Small Company means Company other than Public CO. having Paid up Capital not more than Rs.
50 Lakh and TURNOVER not more than Rs. 2 Crores. (Govt. can raise the limits)
Central Government has the power to sanction the scheme, no requirement to approach NCLT
What Is winding up of a company?

 Winding up is the method of ending, or dissolving, a business.

 The winding up activity includes:
 selling all assets,
 paying off creditors, and
 distributing remaining assets to the partners or shareholders
 There are two ways of winding of a company
 Voluntary
 By court
Winding up by Tribunal

 National Company Law Tribunal can be initiated by an application by way of petition for
winding up order.
 It should be resorted to only when other means of healing an ailing company are of
absolutely no avail.
 Remedies are provided by the statute on matters concerning the management and running
of the company.
 It is primarily the NCLT which has jurisdiction to wind up companies under the
Companies Act, 2013.
 There must be strong reasons to order winding up as it is a last resort to be adopted.
Grounds on which a Company may be wound up by the Tribunal(NCLT)

1. Company is unable to pay the debts;

2. If the company has, by special resolution, resolved that the company be wound up
by the Tribunal;
3. If the company has acted against the interests of sovereignty and integrity of India,
the security of the State, friendly relations with foreign States, public order;
4. If the Tribunal has ordered the winding up of the company ;
5. If the company has made default in filing with the Registrar its financial
statements or annual returns for immediately preceding five consecutive financial
years;
6. If the tribunal is of the opinion that it is just and equitable that the company should
be wound up.
7. If the affairs of the company have been conducted in a fraudulent manner or the
company was formed for fraudulent and unlawful purposes or the persons
concerned in the formation or management of its affairs have been guilty of fraud
or misconduct
Who may file petition for winding up

 A petition for winding up may be presented by any of the following:

 The company; or
 Any creditor or creditors, including any contingent or prospective creditor or creditors; or
 Any contributory; or
 All or any of the above three specified parties; or
 The Registrar; or
 Any person authorised by Central Government in this behalf;
 By the Central Government or State Government in case of Company acting against the interest
of sovereignty and integrity of India
Voluntary Winding up

 If the company passes a special resolution for winding up of the Company.

 The company in general meeting passes a resolution requiring the company to be wound
up voluntarily as a result of the expiry of the period of its duration, if any, fixed by its
articles of association or on the occurrence of any event in respect of which the articles of
association provide that the company should be dissolved.
Procedure for Voluntary Winding up of a Company

 Step 1 - Conduct a board meeting with 2 Directors and thereby pass a resolution with a
declaration given by Directors that they are of the opinion that company has no debt or it
will be able to pay its debt after utilizing all the proceeds from sale of its assets.
 Step 2 - Issues notices in writing for calling of a General Meeting proposing the
resolution along with the explanatory statement.
 Step 3 - In General Meeting pass the ordinary resolution for the purpose of winding up by
ordinary majority or special resolution by 3/4th majority
 Step 4 - Conduct a meeting of creditors after passing the resolution, if majority creditors are of the opinion
that winding up of the company is beneficial for all parties then company can be wound up voluntarily.
 Step 5 - Within 10 days of passing the resolution, file a notice with the registrar for appointment of
liquidator.
 Step 6 - Within 14 days of passing such resolution, give a notice of the resolution in the official gazette
and also advertise in a newspaper.
 Step 7 - Within 30 days of General meeting, file certified copies of ordinary or special resolution passed
in general meeting.
 Step 8 - Wind up the affairs of the company and prepare the liquidators account and get the same audited.
 Step 9 - Conduct a General Meeting of the company.
 Step 10 - In that General Meeting pass a special resolution for disposal of books and all
necessary documents of the company, when the affairs of the company are totally wound up
and it is about to dissolve.
 Step 11 - Within 15 days of final General Meeting of the company, submit a copy of accounts
and file an application to the tribunal for passing an order for dissolution.
 Step 12 - If the tribunal is of the opinion that the accounts are in order and all the necessary
compliances have been fulfilled, the tribunal shall pass an order for dissolving the company
within 60 days of receiving such application.
 Step 13 - The appointed liquidator would then file a copy of order with the registrar.
 Step 14 - After receiving the order passed by tribunal, the registrar then publishes a notice in
the official Gazette declaring that the company is dissolved.