The Ministry of Corporate Affairs, on May 15, 2023, issued a Notification amending the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. These amendments seek to expedite the process for fast-track mergers under Section 233 of the Companies Act, 2013 (‘Companies Act’) by prescribing timelines on authorities for communicating their objections, suggestions, as well as deemed approvals. Below is a summary of the key changes which have come into effect from June 15, 2023:
i. The amended sub-rule (5) of Rule 25 states that if no objection or suggestion is received from the Registrar of Companies (‘ROC’) and Official Liquidator (‘OL’) within 30 days of receipt of a copy of the scheme by them, the Central Government (‘CG’) is empowered to approve the scheme if it is in public interest or in the interest of creditors within a period of 15 days after the expiry of above 30 days. Further, if no order has been issued by the CG within 60 days from receipt of the scheme, it will be deemed that the CG has no objection to the scheme and a confirmation order will be issued accordingly;
ii. The amended sub-rule (6) of Rule 25 states that if objections are received by CG from the ROC and / or OL within 30 days of receipt of the scheme, then the CG is empowered to do the following:
- if the objections or suggestions are unsustainable and the CG is of the opinion that the scheme is in public interest or in the interest of creditors, it is empowered to approve the scheme within a period of 15 days after the expiry of such abovementioned 30 days period; or
- if the CG is of the opinion, whether based on such objections or otherwise, that the scheme is not in public interest or in the interest of creditors, it may file an application before the National Company Law Tribunal (‘NCLT’) within 60 days of receipt of the scheme stating the objections or opinion and request the NCLT to consider the scheme under Section 232 of the Companies Act; and
iii. If CG neither approves the scheme nor files an application with NCLT as above within 60 days from the receipt of the scheme, it is deemed that CG has no objection to the scheme and a confirmation order will be issued accordingly.