Merger approvals for startups, small businesses fast-tracked
Summary
Small companies and start-ups seeking approvals for mergers and amalgamations will now have deemed approvals for the transaction if the Centre does not issue a conformation order within 60 days of receiving a request.
New Delhi: The ministry of corporate affairs has made it easier for small companies and startups to secure the green flag for mergers by way of ‘deemed approvals’.
Small companies and start-ups seeking approvals for mergers and amalgamations will now have deemed approvals for the transaction if the Centre does not issue a conformation order within 60 days of receiving a request.
The move, part of the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023 issued by the ministry late on Monday, brings more accountability to the authorities, cuts red tape and helps to improve the ease of doing business.
The original rules formulated in 2016 have been amended to facilitate time-bound decision-making and to bring about clarity in dealing with comments and objections received regarding a particular case, said Jyoti Prakash Gadia, managing director at Resurgent India Ltd, a merchant bank.
The government now has an upper limit of 60 days within which to either approve the merger scheme or place its views before the appellate authority if there are any objections. Failing this, it will be treated as a deemed approval, explained Gadia.
Earlier, there was no specified time period for the approval from the Registrar of Companies (RoC), official liquidator and the central government where the transferee company has filed a scheme copy for the approval of the merger or amalgamation.
As per the amended provision, if no objection or suggestion is received within 30 days from the RoC and official liquidator, the central government has the authority to issue a confirmation order within 15 days provided that it 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 government finds these objections unsustainable and the scheme is determined to be in the public interest, the government may issue a confirmation order within 60 days.
If the scheme is not judged to be in the public interest, then it is to be referred to a tribunal. Where the government fails to issue a confirmation order within 60 days, it is to be deemed that the merger or amalgamation scheme is duly approved, confirmed Jitin Aggarwal, director (Audit & Advisory) at SW India.
“By expediting the merger process, companies can pursue their strategic goals efficiently," said Aggarwal.
