MCA Revises Rules for Fast Track Merger/Arrangement Schemes

Recently, on May 15, 2023, the Ministry of Corporate Affairs issued a notification G.S.R. 367(E) regarding revision of Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016. Now, for better clarity and understanding, these rules will now also be known as the Companies (Compromises, Arrangements, and Amalgamations) Amendment Regulations, 2023,

These new regulations will be applicable with effect from June 15, 2023.

• According to these rules, in case, no objections are received from the Registrar of Companies or official liquidator within 30 days of receipt of the scheme and if the Central Government believes that the scheme is in the public interest or in the interest of creditors, the Central Government can issue a confirmation order of the merger or amalgamation in Form No. CAA.12 within 15 days after expiry of 30 days.

• If, in the above case, the official liquidator or the Registrar of Companies submits any objections or suggestions to the Central Government within 30 days of receipt of scheme then in that case:

-If such objections are unacceptable, then, the Central Government can pass a confirmation order within the time limit of 60 days in Form No. CAA.12 if it is of the opinion that the scheme is in the public interest or in the interest of creditors.

-If the Central Government believes that, as per the objections, such a scheme is not in the public interest or in the interest of creditors, it can within sixty days of receiving the scheme, file an application in a prescribed Form No. CAA.13 before the Tribunal stating the objections and opinion.

In all the above cases, if the Central Government fails to issue a confirmation order (apparently approving the scheme) or file any application before Tribunal within sixty days of receiving such scheme, it will be presumed that the Central Government has no objection to the scheme and such scheme is approved.

Impact of the above changes:

The newly enacted regulations will have a major impact on the startup units, especially as the area is projected to witness more mergers and acquisitions than ever before due to continued macroeconomic headwinds. Many startups are currently struggling to get finance and to sustain themselves in the current business environment, and they sometimes require a merger or amalgamation with a macro unit to sustain their business and to realign their business strategy. Due to these new amended regulations, they will find a better solution for revival for fast-track mergers.

Refer full notification from below link:

https://www.mca.gov.in/bin/dms/getdocument?mds=1Wyd8lldgilFPq8Dx6A3QA%253D%253D&type=open

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