difference between merger and amalgamation under companies act, 2013

As per law, the word “amalgamation” or “merger” is not defined in the companies Act, 2013. Though, the word “merger and amalgamation” is used and section 232 of the Act talks about the merger and amalgamation of companies. However, Section 2 (1B) of the Income tax Act, 1961 defines “Amalgamation” All. Exemption from court process Companies Act 2013 Companies Act 1956 Option to following companies to undertake corporate reorganizations like amalgamation, demerger, etc. A minimum of two companies are required, i.e. Likewise, every merger also has an 'Effective Date'. Section 230-240 of the Companies Act, 2013 ("the Act") provide us with a mechanism where in a scheme of arrangement may be entered into between a company, its creditors or and its members. It is sometimes ideal to have both on the same date from commercial angle particularly in the case of demerger. Section 230 deals with the power to make compromise and arrangement of companies. 431 ‘Cross border merger’ means any merger, amalgamation or arrangement between an Indian Company and Foreign Company, in accordance with Companies (Compromises, Arrangements, and Amalgamations ) Rules, 2016 notified under the Companies Act, 2013. This Scheme of Amalgamation provides for the amalgamation of the Transferor Company with the Transferee Company pursuant to Sections 230 to 232 and other relevant provisions of the Company Act, 1956 and other applicable provisions of the Company Act, 2013. Legal aspect of Merger/Amalgamation. First Notes on. Both the transferor and the transferee company shall make an application in the form of petition to the Tribunal under section 230-232 of the Companies Act, 2013 for the puspose of sanctioning the scheme of amalgamation. 2.) A Merger or Amalgamation is an arrangement whereby the assets of two or more companies become vested in one company (which may or may not be one of the original two companies). Meaning. Procedure to be followed for merger or amalgamation of two or more small companies or between a holding company and its wholly owned subsidiary company or such other class or classes of companies as may be prescribed under section 233 of CA, 20133 (Fast track merger… The following is the prescribed procedure for Mergers and Amalgamations under Companies Act, 2013. Certain business combinations such as mergers and amalgamations are dealt with under Chapter XV-Compromises, Arrangements and Amalgamations of the Companies Act, 2013 (2013 Act). MERGER AND AMALGAMATION OF COMPANIES [Effective from 15th December, 2016](1) Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal— (a) that the compromise or arrangement has been … MERGER OR AMALGAMATION OF A COMPANY WITH FOREIGN COMPANY (SECTION 234):- • The provision of this chapter shall also apply to the scheme of mergers and amalgamations between companies registered under the Companies Act, 2013 and companies incorporated in the jurisdictions of such countries as may be notified. Key Differences Between Amalgamation and Merger There is a very fine difference as both processes are a way to a consolidation of multiple companies. Amalgamation involves combining of two or more existing companies to form a new company. The difference between Section 394 and Clause 232 is that, in Clause 232, an attempt has been made to codify separately, the complete procedure for amalgamation and demerger of companies. 12 December 2016. First step in this process is to draft a scheme of compromise or arrangement for restructuring or amalgamation. Companies Act, 1956 has provided for a set of provisions specially dealing with amalgamation of companies, to … The Companies Act, 2013 (2013 Act) has seen the light of day and replaced the 1956 Act with some sweeping changes including those in relation to mergers and acquisitions (M&A). Amalgamation of companies means combining two or more companies and creating a new entity from it. Companies Act 1956 was separated into 13 parts having 658 sections, along with 15 schedules where as Companies Act 2013 has been divided into 29 chapters along with 470 sections and 7 schedules. Financial reporting. The mechanism envisages a mandatory approval3 4of the Tribunal which has replaced the High Court. Under Companies Act, 1956 – Section 390-396A. Merger is generally a scheme of arrangement or Compromise between a Company, Shareholders and Creditors , whereas, Amalgamation is defined under section 2 (1b) of Income Tax Act, 1961 as a Merger of one or more Companies with another Company or Merger of two or more Companies to form a new Company. MERGER AND AMALGAMATION UNDER COMPANIES ACT: Section relating to merger and amalgamation under companies act , 2013 are 230 and 232. Amalgamation results in … SECTION 232. A. As a concept, ‘merger’ is a combination of two or more entities into one; the desired effect being not just the accumulation of assets and liabilities of the Mergers and Amalgamations The term ‘merger’ is not defined under the Companies Act, 2013 (“CA 2013”) or under Income Tax Act, 1961 (“ITA”). 6: Merger of a Listed Company … (14) A company covered under this section may use the provisions of section 232 for the approval of any scheme for merger or amalgamation. With the notification of the relevant sections dealing with compromises, arrangements and ... • Goodwill is measured as the difference between The provisions relating to merger and amalgamation are contained in sections 390 to 396A in Chapter V of Part VI of the Companies Act, 1956. Merger. Know the difference between Slump Sale and Demerger procedure to be followed, companies act 2013, business transfer agreement, income tax. Both these dates are crucial in many respects, including, for purposes of the Income-Tax Act, 1961 and in particular the assessment of income of the two companies under that Income- Tax Act,1961. Regulatory and other information. (1) Where an is made to the under section 230 for the sanctioning of a compromise or an arrangement proposed between a and any such persons as are mentioned in that section, and it is shown to the — (a) that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme … Continue reading Section 232. Definition. On 7th November, 2016 Central Government issued a notification for enforcement of section 230-233, 235-240, 270-288 etc pertaining to proceedings relating to arbitration, compromise, arrangements and reconstruction of companies … Laws Governing Mergers in India Section 232 of the Companies Act, 2013 provides for amalgamation of an Indian company with another Indian company, whereas under Section 234 of the Companies Act, 2013, an Indian company merges with a foreign entity, also known as a cross-border merger. 3.) without Court process Between two or more small companies as No provisions for exemption from court process for defined in the Cos Act 2013. memorandum of association of the companies seeking to merge There are number of companies going for restructuring way, to gain more benefits from its core competencies. Section 233 of the Act read with Rule 25 of the Companies , Arrangements & Amalgamation Rules, 2016 deals with fast track Mergers . Number of Companies required. This procedure is only permitted between a holding company and one or more of its wholly-owned subsidiaries, or between two or more wholly-own… E-Voting was not permitted under 1956 Act. 2. 21. There is no expressed definition of amalgamation in the Act. Difference Between Merger & Amalgamation (M&A) and Private Equity Buyouts (13) The Central Government may provide for the merger or amalgamation of companies in such manner as may be prescribed. Amalgamation is a type of consolidation processes used under a merger. 1961 as a Merger of one or more Companies withanother Company or Merger of two or more Companies to form a newCompany. Section Section 232 of the Companies Act, 2013 provides the provisions for amalgamation. The merger MERGER & AMALGMATION. Banking and insurance. Merger is a process of combining two business entities into one. Amalgamation is a common strategy by companies for varying purposes such as: 1. This meant that, mergers between group companies, and subsidiaries have to also conform to the normal procedure. Mergers, Take-over of Companies The Companies Act, 2013 contains provisions relating to various methods of reorganisation of companies under Sections 230 to 240 of the Act. However, Section 2(1B) of the Income Tax Act, 1961 widely explains the term amalgamation by clearly stating the conditions, under which a merger could qualify as an amalgamation. For the consultation, contact Huconsultancy (joint venture consulting services). Under the Old Act, mergers/amalgamations between group companies and subsidiaries are placed on the same pedestal on which mergers/amalgamations between entirely unrelated companies are placed. Transferor and Transferee. The difference between both the dates are mentioned below: [1] An application for Merger & Amalgamation can be file with Tribunal (NCLT). Let us analyse the legal provisions under the Companies Act 2013: Information, communication, entertainment. Section 234 – Merger or amalgamation of company with foreign company Provisions relating to merger, amalgamation and windingup, - etc. Short form amalgamations are available solely for companies within the same corporate group and where there are no minority interests. Power to undergo amalgamation: Most importantly, it must be ensured that the companies undergoing the amalgamation have the power in the object clause of their Memorandum of Association to undergo such amalgamation. Proposed scheme of Merger & Amalgamation is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013. Such other necessary information or document relevant to making a decision in favor or against the scheme. Amalgamation is a type of Merger in which two or more business entities decides to join and form a new company. are notified under the Companies Act, 2013. In this article, we try to unveil the various aspects and implications of the same under various laws. INTRODUCTION. IV. Normally appointed date is before effective date. Merger through holding company; Merger for revival and rehabilitation. Thus, the changes introduced under the 2013 Act are: In the case of members, objections can be raised only be persons holding not less than ten percent of the shareholding. There are two types of Cross border mergers – Inbound Merger and Outbound Merger. Merger can be either in the form of amalgamation above or may involve takeover of one or more target companies by an existing company. The terms merger and amalgamation are synonyms and the term ‘ amalgamation’, as per Concise Oxford Dictionary, Tenth Edition, means , ‘to combine or unite to form one organization or structure’. In any scheme of Mergers or Demergers, the definition of Appointed date and Effective date play a very crucial role. It is a legal process by which two or more companies are joined together to form a new entity or one or more companies are absorbed by another company and as a consequence the … Section 234 deals with such schemes of mergers and amalgamations between companies registered under this Companies Act, 2013 and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the Central … “Merger and Amalgamation: ... As these two terms are not defined under the Companies Act, 2013, there is not much difference between these two words they are used interchangeably in most cases yet in strict senses few differences can be pointed out such as the merger is commonly used for the fusion of two companies. 3 Grant Thornton India, LLP, “Implications of Companies Act, 2013, Mergers and Amalgamations”. There are specific provisions incorporated under Act for completion of Company Mergers without following detail procedures otherwise laid down under Section 230 and 232 of the Act. Section 231 explains the power of Tribunal to enforce compromise or arrangement. It is unique concept because High Court … Amalgamation. i.e., Compromise, Arrangements, Reconstruction, Amalgamation & Mergers. Companies Act, 2013 allows merger of Indian companies also into foreign companies subject to checks and balances as laid down. 1. P rocedure For Merger and Amalgamation Under Companies Act 2013 1. Mergers and amalgamations have been dealt widely under the Companies Act 2013. There are two forms of voluntary amalgamation procedures, the “short form” procedure and the procedure under sections 215B and 215C of the Act (often referred to in its abbreviated term, the “long form” procedure). Proposed in the scheme of Merger & Amalgamation ( C&A) is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013; and Such other information or documents as the Board or Management believes necessary and relevant for making decision for or against the scheme; Merger in public interest under the orders of Central Government. Disclosures. The key points of difference between amalgamation and merger have been detailed below: 1. Sector. FAST TRACK MERGER (FTM) Section 233 of Companies Act, 2013 – Merger or Amalgamation of certain companies {Rule 25 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016} [Effective from 15th December, 2016] Fast Track Merger (FTM) is a new concept introduced under the Companies Act, 2013. Clause 232 opens with the provision that where an application is made to the Tribunal under Clause 230 and if it pertains to – In India, the concept of Merger and Amalgamation is primarily governed by the regulations of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2020, and Section 230 to 234 of the Companies Act, 2013. However, the following key legislation also regulate the activities of Merger and Amalgamation in India: Presently, the High Court enjoys powers of sanctioning merger or amalgamation matters under section 394 of the Companies Act, 1956 but once merger sections covered under the Companies Act, 2013 gets notified then this power of sanctioning merger or amalgamation will be exercised by the National Company Law Tribunal (NCLT). Merger and amalgamation of companies → Under the Companies Act 2013, the concept of merger & amalgamation is fully explained whereas under Companies Act 1956, the term ‘merger’ is not defined and also under the Income Tax Act, 1961. Corporate law updates. Point of Difference.

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