Documentation – Corporate Restructuring, Insolvency, Liquidation & Winding-Up Important Questions
Question 1.
What are the various stages involved in the merger of a company under the Companies Act, 2013?
Answer:
A merger can be defined as a fusion of one company with another. Amalgamation may be an arrangement, whereby assets of two companies get transferred to one company.
Basically, merger or amalgamation is a legal process whereby two or more companies come together for growth, expansion and prosperity.
Documentation is an important aspect in fulfilment of legal requirements and obligations in mergers and amalgamation.
Broad stages involved in merger of a company are listed below:
- Stage 1. Drafting of the Scheme
- Stage 2. Obtaining the approval of the Board of Directors of the companies involved
- Stage 3. Obtaining approval of the stock exchanges in case of listed companies
- Stage 4. Application/ Petition for convening the meeting of members/creditors shall be filed with National Company Law Tribunal
- Stage 5. Convening meetings of the shareholders and creditors and obtaining their consent on Scheme
- Stage 6. Approvals or No objection from Regional Director/Official Liquidator
- Stage 7. Filing of final petition with NCLT for approving the Scheme
- Stage 8. Obtaining order for approval for scheme of merger/amalgamation from the National Company Law Tribunal.
Question 2.
Central Government has power to examine the books and papers, financial reports even after sanctioning of the scheme by National Company Law Tribunal – Elaborate the issue in relation to preservation of records of amalgamated Companies.
Answer:
Section 239 provides for preservation of books and papers of the amalgamated companies:
The books and papers of a company which has been amalgamated with, or whose shares have been acquired by another company, shall not be disposed-off without the prior permission of the Central Govt.
Prior to granting such permission, that Government may appoint a person to examine the books and papers for the purpose of ascertaining whether they contain any evidence of any offence in connection with the promotion or formation, or the management of the affairs, of the Transferor Company or its amalgamation or the acquisition of its shares.