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The procedure
for the amalgamation of two companies has to be viewed from the
Transferor and Transferee Company. Therefore, the procedure has
been divided into two parts i.e. procedure to followed by the
transferor company and the transferee company respectively.
Steps To Be Followed By Transferee Company
1. Memorandum Of Association (M/A)
The Memorandum of Association must provide the power to
amalgamate in its objects clause. It M/A is silent, amendment in
M/A must take place.
2. Board
Meeting
A Board Meeting shall be convened to consider and pass the
following requisite resolutions:
- approve the draft scheme of amalgamation;
- to authorise filing of application to the court for directions
to convene a general meeting;
- to file a petition for confirmation of scheme by the High Court.
3.
Application To The Court
An application shall be made to the court for directions to
convene a general meeting by way of Judge's summons supported by
an affidavit. The proposed scheme of amalgamation must be attached
to such affidavit.
Summons
- Form No. 33
Affidavit - Form No. 34
The summons should be
accompained by:
" A certified copy of the M&A of both companies
" A certified true copy of the latest audited B/S and P&L A/c of
transferee company
4. Copy To Regional
Director
A copy of application made to concerned H.C. shall also be sent to
the R.D. of the region. Although, such notice is supposed to be
sent by the H.C., usually the company sends it without waiting for
the H.C. to send it.
5. Order Of High Court
On hearing of the summons, the H.C. shall pass the necessary
orders which shall include:
" Time and place of the meeting
" Chairman of the meeting
" Fixing the quorum
" Procedure to be followed in the meeting for voting by the
proxy
" Advertisement of notice of the meeting
" Time limit for the chairman to submit the report to the
court regarding the result of the meeting
Orders in - Form No. 35
6. Notice Of The Meeting
The notice of the meeting shall be sent to the creditors
and/or the shareholders individually by the chairman so appointed
by registered post enclosing:
" A statement setting forth
the following:
- Terms of amalgamation and its effects
- Any material interests of the director, MDs or Manager, in any
capacity
- Effect of the arrangement on those interests.
" A copy of the proposed
scheme of amalgamation
" A form of proxy
" Attendance slip
" Notice of the resolution for
authorizing issue of shares to persons other than existing
shareholders
Notice in - Form No. 36
Proxy in - Form No. 37
7. Advertisement Of Notice
Of Meeting
The notice of the meeting shall be advertised in an English and
Hindi N/P as the court may direct.
Advertisement in - Form No. 38
8. Notice To Stock Exchange
In case of the listed company, 3 copies of the notice of the
general meeting alongwith enclosures shall be sent to the Stock
Exchange where the company is listed.
9. Filing Of Affidavit For The Compliance
An affidavit not les than 7 days before the meeting shall be filed
by the Chairman of the meeting with the Court showing that the
directions regarding the issue of notices and advt. Have been duly
complied with.
10. General Meeting
The General Meeting shall be held to pass the following
resolutions:
" Approving the scheme of
amalgamation by ūth majority
" Special Resolution
authorizing allotment of shares to persons other than existing
shareholders or an ordinary resolution be passed subject to
getting Central Government's approval for the allotment as per the
provisions of Section 81(1A) of the Companies Act, 1956.
" The resolution to empower
directors to dispose of the shares not taken up by the dissenting
shareholders at their discretion.
" An ordinary/special
resolution shall be passed to increase the Authorised share
capital, if the proposed issue of shares exceeds the present
authorised capital.
The decision of the meeting shall be ascertained only by taking a
poll on resolutions.
11. Reporting Of Result Of
The Meeting
The Chairman of the meeting shall report the result of the meeting
to the court within the time fixed by the judge or within 7 days,
as the case may be. A copy of proceedings of the meeting shall
also be sent to the concerned Stock Exchange.
Report
in - Form No. 39
12. Formalities With Roc
The following documents shall be filed with ROC alongwith the
requisite filing fees:
" Form No. 23 of Companies
General Rules & Forms + copy of Special Resolution
" Resolution approving the
scheme of amalgamation
" Special resolution passed
for the issue of shares to persons other than existing
shareholders
13. Petition
For approval of the scheme of amalgamation, a petition shall be
made to the H.C. within 7 days of the filing of report by the
chairman.
Petition in - Form No. 40
Note:
" If the Regd. Offices of the
companies are in same state - then both the companies may move
jointly to the High Court.
" If the Regd. Offices of the
companies are in different states - then each company shall move
the petition in respective High Court for directions
14. Sanction Of The Scheme
The Court shall sanction the scheme on being satisfied that:
" The whole scheme is annexed
to the notice for convening meeting. This provision is mandatory
in nature
" The scheme should have been
approved by the company by means of ūth majority of the members
present.
" The scheme should be genuine
and bona fide and should not be against the interests of the
creditors, the company and the public interest.
After satisfying itself, the court shall pass orders in the
requisite form
Orders in - Form No. 41
15. Stamp Duty
A scheme sanctioned by the court is an instrument liable to stamp
duty.
16. Filing With Roc
The following documents shall be filed with ROC within 30 days of
order:
" A certified true copy of
Court's Order
" Form No. 21 of Companies
General Rules & Forms
17. Copy Of Order To Be Annexed
A copy of court's order shall be annexed to every copy of the
Memorandum of Association issued after the certified copy of the
order has been filed with as aforesaid.
18. Allotment Of Shares
A Board Resolution shall be passed for the allotment of shares to
the shareholders in exchange of shares held in the
transferor-company and to fix the record date for this purpose.
Steps
To Be Followed By Transferor Company
The procedure as given above shall be followed by the transferor
company.
The only exception is that - there is no need
for the transferor company to pass a special resolution for
offering shares to the persons other than the existing
shareholders and to file Form No. 23 of the Companies General
Rules and Forms with the Registrar of Companies.
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Authored by
Vineet Sharma and can be reached at
: vineet.sharma@scicmp.com
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