In a bid to expedite the merger process between two or more start-up companies or small companies with start-up companies or both, the Ministry of Corporate Affairs (MCA) on Tuesday specified a time limit for the approval of mergers or amalgamations.
According to the amendment provision of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, if no objection or suggestion is received within thirty days from the Registrar of Companies (RoC) and Official Liquidator, the central government has the authority to issue a confirmation order within fifteen days for the merger or amalgamation scheme provided that the scheme is in the public interest.
If any objections or suggestions are received from the RoC and Official Liquidator and the central government found these objections to be unsustainable and the scheme is determined to be in the public interest, it may issue a confirmation order within sixty days, said the order.
“The recent notification by the MCA indicates their proactive approach towards expediting the merger process. Earlier, there was no specified time period for the approval from the RoC, official liquidator or central government…..By expediting the merger process, companies can pursue their strategic goals efficiently while adhering to legal requirements and protecting the interests of various stakeholders,” Jitin Aggarwal, Director (Audit & Advisory) at SW India, said.
“The amendment will improve the disposal rate of fast-track merger and in turn facilitate ease of doing business as it prescribes a time-frame of maximum 60 days for the Regional Director under the MCA for issuing a confirmation order if the RoC under which the company is registered or official liquidator appointed for the merger do not raise any objection,” Makarand Joshi, founder, MMJC and Associates, a corporate compliance firm, said.
As per the MCA’s annual report of 2022-23, nearly 350 out of 538 fast-track merger schemes have been disposed of between November 2021 and October 2022.