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Section 233: Merger or amalgamation of certain companies
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(1)
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Notwithstanding the provisions of section 230 and section 232, a scheme of merger
or amalgamation may be entered into between 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, subject to the following, namely:-
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(a)
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a notice of the proposed scheme inviting objections or suggestions, if any, from
the Registrar and Official Liquidators where registered office of the respective
companies are situated or persons affected by the scheme within thirty days is issued
by the transferor company or companies and the transferee company;
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(b)
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the objections and suggestions received are considered by the companies in their
respective general meetings and the scheme is approved by the respective members
or class of members at a general meeting holding at least ninety per cent. Of the
total number of shares;
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(c)
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each of the companies involved in the merger files a declaration of solvency, in
the prescribed form, with the Registrar of the place where the registered office
of the company is situated; and
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(d)
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the scheme is approved by majority representing nine-tenths in value of the creditors
or class of creditors of respective companies indicated in a meeting convened by
the company by giving a notice of twenty-one days along with the scheme to its creditors
for the purpose or otherwise approved in writing.
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(2)
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The transferee company shall file a copy of the scheme so approved in the manner
as may be prescribed, with the Central Government, Registrar and the Official Liquidator
where the registered office of the company is situated.
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(3)
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On the receipt of the scheme, if the Registrar or the Official Liquidator has no
objections or suggestions to the scheme, the Central Government shall register the
same and issue a confirmation thereof to the companies.
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(4)
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If the Registrar or Official Liquidator has any objections or suggestions, he may
communicate the same in writing to the Central Government within a period of thirty
days:
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Provided that if no such communication is made, it shall be presumed that he has
no objection to the scheme.
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(5)
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If the Central Government after receiving the objections or suggestions or for any
reason is of the opinion that such a scheme is not in public interest or in the
interest of the creditors, it may file an application before the Tribunal within
a period of sixty days of the receipt of the scheme under subsection (2) stating
its objections and requesting that the Tribunal may consider the scheme under section
232.
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(6)
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On receipt of an application from the Central Government or from any person, if
the Tribunal, for reasons to be recorded in writing, is of the opinion that the
scheme should be considered as per the procedure laid down in section 232, the Tribunal
may direct accordingly or it may confirm the scheme by passing such order as it
deems fit:
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Provided that if the Central Government does not have any objection to the scheme
or it does not file any application under this section before the Tribunal, it shall
be deemed that it has no objection to the scheme.
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(7)
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A copy of the order under sub-section (6) confirming the scheme shall be communicated
to the Registrar having jurisdiction over the transferee company and the persons
concerned and the Registrar shall register the scheme and issue a confirmation thereof
to the companies and such confirmation shall be communicated to the Registrars where
transferor company or companies were situated.
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(8)
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The registration of the scheme under sub-section (3) or sub-section (7) shall be
deemed to have the effect of dissolution of the transferor company without process
of winding up.
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(9)
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The registration of the scheme shall have the following effects, namely:—
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(a)
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transfer of property or liabilities of the transferor company to the transferee
company so that the property becomes the property of the transferee company and
the liabilities become the liabilities of the transferee company;
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(b)
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the charges, if any, on the property of the transferor company shall be applicable
and enforceable as if the charges were on the property of the transferee company;
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(c)
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legal proceedings by or against the transferor company pending before any court
of law shall be continued by or against the transferee company; and (d) where the
scheme provides for purchase of shares held by the dissenting shareholders or settlement
of debt due to dissenting creditors, such amount, to the extent it is unpaid, shall
become the liability of the transferee company.
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(10)
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A transferee company shall not on merger or amalgamation, hold any shares in its
own name or in the name of any trust either on its behalf or on behalf of any of
its subsidiary or associate company and all such shares shall be cancelled or extinguished
on the merger or amalgamation.
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(11)
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The transferee company shall file an application with the Registrar along with the
scheme registered, indicating the revised authorised capital and pay the prescribed
fees due on revised capital:
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Provided that the fee, if any, paid by the transferor company on its authorised
capital prior to its merger or amalgamation with the transferee company shall be
set-off against the fees payable by the transferee company on its authorised capital
enhanced by the merger or amalgamation.
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(12)
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The provisions of this section shall mutatis mutandis apply to a company or companies
specified in sub-section (1) in respect of a scheme of compromise or arrangement
referred to in section 230 or division or transfer of a company referred to Section
(b) of subsection (1) of section 232.
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(13)
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The Central Government may provide for the merger or amalgamation of companies in
such manner as may be prescribed.
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(14)
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A company covered under this section may use the provisions of section 232 for the
approval of any scheme for merger or amalgamation.
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