Introduction:

In a recent development, the Central Government has introduced amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. These changes aim to streamline the process of compromises, arrangements, and amalgamations in companies, ensuring they are conducted in the public interest and for the benefit of creditors. Let's delve into the key updates brought about by the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023.

Short Title and Commencement:

The amended rules, known as the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023, will come into effect from the 15th day of June, 2023.

Amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016:

Two significant amendments have been made to sub-rules (5) and (6) of rule 25 in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Let's explore these changes in detail:

Confirmation Order for Scheme of Merger or Amalgamation:

Previously, if no objection or suggestion was received within a certain timeframe, the Central Government had the authority to issue a confirmation order for the scheme of merger or amalgamation. Under the new amendment, if no objection or suggestion is received within thirty days of receiving the scheme from the Registrar of Companies and Official Liquidator, the Central Government may issue a confirmation order in form CAA 12 within fifteen days after the expiration of the thirty-day period if it is in the interest of public or the creditors. Moreover, if the Central Government fails to issue the confirmation order within sixty days of receiving the scheme, it will be deemed that there are no objections, and a confirmation order will be issued accordingly.

Objections or Suggestions Received:

Previously, objections or suggestions received within a specific timeframe were considered. The new amendment provides a clearer framework for handling objections or suggestions. If objections or suggestions are received within thirty days of receiving the scheme from the Registrar of Companies or Official Liquidator or both, the following scenarios may occur:

If the objections or suggestions from the Registrar of Companies or Official Liquidator are deemed invalid and the Central Government believes the scheme is in the public interest or in the interest of creditors, it may issue a confirmation order within thirty days after the initial thirty-day period in Form CAA 12.

If the Central Government, based on the objections or other reasons, believes that the scheme is not in the public interest or in the interest of creditors, it may file an application before the Tribunal within sixty days of receiving the scheme. The application will state the objections or opinions and request the Tribunal to consider the scheme under section 232 of the Act.

If the Central Government fails to issue a confirmation order or file any application within sixty days of receiving the scheme, it will be deemed that there are no objections, and a confirmation order will be issued accordingly.

Conclusion:

The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023, have brought about significant changes to the process of compromises, arrangements, and amalgamations in companies. These amendments aim to ensure that such processes are conducted in the public interest and for the benefit of creditors. By providing clarity on timelines and actions to be taken by the Central Government regarding objections or suggestions received, the amended rules strive to create a more efficient and transparent framework for companies involved in mergers, amalgamations, and other restructuring activities. These changes will undoubtedly contribute to the growth and stability of the corporate landscape in India.

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