For merger or amalgamation, the government may issue a confirmation order of such scheme within a period of fifteen days
In cases where the merger or amalgamation is not beneficial to the public interest, the Centre can file an application before the tribunal for a review.
If the government does not issue a confirmation order or file an application within sixty days, the merger or amalgamation scheme will be deemed to be approved
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The ministry of corporate affairs (MCA) has notified changes to the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2016, effective from May 15.
As per the new rules, Merger & Acquisitions (M&As) will now be able to secure approval within 15 days that can go up to a maximum of 60 days. The new rules have been named as the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023 by MCA.
In cases of amalgamation or merger where no objection or suggestions are received from the Registrar of Companies and the official liquidator within 30 days of the receipt of a copy of the scheme, the Centre can issue a confirmation order within 15 days provided that the scheme is in the public interest or in the interest of creditors.
If any objections or suggestions are received from the RoC and official liquidator and the Centre finds these objections to be unsustainable and the scheme is determined to be in the public interest, it may issue a confirmation order within 60 days.
In cases where the merger or amalgamation is not beneficial to the public interest, the Centre can file an application before the tribunal for a review.
If the government does not issue a confirmation order or file an application within sixty days, the merger or amalgamation scheme will be deemed to be approved.
The new rules will impact the startup ecosystem significantly, especially when the space is expected to see more M&As than ever due to the ongoing macroeconomic headwinds. As many startups are operating with poor unit economic and struggling to raise funds, they may look for M&A deals to stay afloat amid funding crunch.
In the meantime, a total of 240 M&A deals took place in 2022, 10% higher than in 2021, according to Inc42’s ‘Annual Funding Report 2022’. Enterprisetech emerged as the sector to witness the highest M&A activity in 2022.
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