Where application section 391(1) is considered, The Calcutta High Court has held that no notice to Central Government is necessary.However, Allahabad High Court has held that in such a matter both the Central Government and the Shareholders of the company is entitled to be heard before any decision is made under this section.WHEN COURT CAN PROCEED TO GIVE EFFECT TO SCHEME The court held that the amalgamation scheme has been approved by the majority of the shareholders of both the companies, the exchange ratio has been fixed by a reputed firm of Chartered Accountants and accepted by the share holders, the statutory formalities have been complied with, the scheme is fair and reasonable and there is no fraud involved, then the court would proceed to give effect to the decision of the majority of the share holders of the company. The Mo A of the company contains power to amalgamate. The affidavit is signed and sworn in prescribed manner by the deponent under Code of Civil Procedure, 1908. Send a copy of application made to the court to the concerned Regional Director, Department of Company Affairs (section 394A). The High Court should give the directions in respect of the matter set out in Rule 69 of Companies Court Rules, with respect to meeting including fixation of time, place and quorum of such meeting, appointment of chairman, etc. Notice of general meeting should be sent to members setting forth the terms of compromise or arrangement and their effect, interest of directors, managing director or manager of the company and effect of those interested on the amalgamation. 36 of Companies Court Rule] shall be sent to the members at least 21 clear days before meeting [ Rule 74 of Companies Court Rules ]. Where notice is sent by an advertisement , he same should be in the form no.If not, alter the object clause of memorandum by following the procedure laid down under section 17. The Draft scheme of amalgamation (based on fair exchange ratio) prepared and approved by the Board of Directors. 38 of Companies Court Rules and include the aforesaid statement or a notification of the place at which and the manner in which the members who are entitled to attained the meeting may obtain copies thereof [ Rule 74 of Companies Court Rules ]. If the amalgamation affects the rights of debenture holders, the said statement shall give the like information and explanation as respects the trustees of any deed for securing the debenture as it is required to give as respects the company’s Directors [section393(2)]. Provide a copy of statement free of charge to every creditor or member applying for the same within 24 hours of the requisition made so. Ensuring the chairman appointed by the Court for the meeting of company or any other person files an affidavit at least 7 days before the meeting showing the directions regarding the issue of notice and advertisement have been compiled with [Rules 75 and 76 of Companies Court Rules]. Hold the general meeting and pass the resolution as mentioned below: 1. 23 along with copy of resolution and explanatory statement with filing fee with the Registrar of Companies within 30 days of passing. The Chairman should report the result of the meeting to the court on form no 39 within time fixed by the court or within 7 days of conclusion of meeting. Move the High Court for approval by submitting a petition in Form no.The court must be satisfied that statutory majority are acting in bona fide manner and that any intelligent and honest man belonged to the class would approve the scheme.CREDITOR’S RESOLUTIION – NECESSARY The creditors have to pass requisite resolution for a scheme on arrangement or compromise with them.A Foreign company which is an unregistered company is a ‘company’ under this section .
MRTP Companies- Amalgamation Where two companies are carrying on the same business, there was no need to file application under section 23 of MRTP Act for amalgamation thereof, although both companies are registered under MRTP Act and requirements under section 23(3) of MRTP Act is fulfilled.
Any proposal of amalgamation or merger begins with the process of due diligence, as the proposal for merger without due diligence is like entering a tunnel with darkness growing with each step.
The due diligence process makes the journey see the light at the end of the tunnel – the light of wisdom to amalgamate or not.
COMPROMISE AND ARRANGEMENT ‘Compromise’ is an expression which implies the existence of a dispute such as relating to rights, which it seeks to settle.
‘Arrangement’ is a term of very wide import, and its meaning is not to be limited to something analogous to a compromise to a compromise.