Step by Step procedure for Amalgamation

Mergers and Amalgamations is a subject of interest for corporate professionals. On the basis of my experience of handling a few amalgamation cases, I have tried to pin down the step by step procedure for amalgamations. The procedure has been stated for a listed company. In case of unlisted companies, the steps pertaining to Stock Exchange compliances will not be required.

The detailed procedure is as under:

1. Intimate the Stock Exchange about the Board Meeting in which the proposal for amalgamation will be considered.

2. Conduct the Board Meeting for considering the proposal of amalgamation. The Board has to in-principally approve the amalgamation and appoint Chartered Accountant as Valuer for recommending the share exchange ratio and Advocates for representing the matter on behalf of the Company before the Hon’ble High Court.

3. Intimate Stock Exchange about the decision at the Board and intimation about the next Board Meeting for finalizing the Share Exchange Ratio & Scheme of Amalgamation.

4. Hold the Board Meeting to approve the Scheme of Amalgamation and the Share Exchange Ratio.

5. Intimate Stock Exchange about the result of the Board Meeting and the Share Exchange Ratio.

6. Apply to the Stock Exchange(s) where the Shares of the Company are listed under Clause 24(f) of the Listing Agreements.

7. After 30 days of making the above application, apply to the Hon’ble High Court seeking directions for holding meeting of Shareholders & Creditors.

8. Obtain Order from the Hon’ble High Court convening the meeting of the Shareholders & Creditors meeting and for publishing advertisements for the same. Creditor’s meetings are not required in the Transferee Company.

9. Publish the Advertisements in Newspapers about meetings in accordance with the schedule given by the Hon’ble High Court.

10. Send printed notices of court convened meetings to the Shareholders & Creditors in accordance with the instruction of the Hon’ble High Court. The notices have to be sent Under Postal Certification only (UPC).

11. Send 3 copies to Stock Exchanges where the Company's Shares are listed.

12. Prepare the Affidavit for Dispatch of Notices and for Publication of Advertisements and file them with the Hon’ble High Court alongwith original proof of dispatch and original proof of publication of advertisements.

13. Conduct the Court convened Meetings of the shareholders and creditors in accordance with the instructions of the Hon’ble High Court. Please note that this resolution has to be passed by Special Majority i.e. more than 50% in number and more than 75% in value have to vote in favour of the resolution. The result of the meeting has to be decided by Poll only. Proxies are considered as members / creditors only for the purposes of Poll.

14. Inform the Stock Exchanges regarding the outcome of the meeting and within reasonable time, submit Minutes of the Meeting.

15. After the resolution has been approved, File Form No. 23 with the Registrar of Companies (ROC) within 30 days from the date of the meeting.

16. Within 7 days of the Meeting, the Chairman's Report for the meetings has to be filed with the Hon’ble High Court.

17. Within 7 days of filing the Chairman’s Report, the Company Petition has to be filed with the Hon’ble High Court for approving the Scheme of Amalgamation.

18. Obtain an Order of admission of petition from Hon’ble High Court. The Hon’ble High Court would order a copy of the Petition to be served to the office of the Regional Director (RD) and the Official Liquidator (OL).

19. Submit a Certified Copy of the Petition with the office of the RD and the OL. The RD would require a copy of the Petition to be submitted to the office of the ROC and hence, it is advisable to be proactive and file the copy of petition with the office of the ROC as well.

20. The ROC will investigate into the compliances by the Companies and whether the scheme is prejudicial to the interest of the shareholders or creditors. The ROC will submit its report to the RD.

21. The RD will require details from the Companies and make a separate study of the Scheme of Amalgamation and whether the scheme is prejudicial to the interest of the shareholders or creditors. The RD will prepare its report and sent it to the ROC. The ROC will forward the report to the Government Counsel.

22. The OL will recommend and appoint an auditor for verifying the details of the Transferor Company and to investigate into the affairs of the Company. The auditor appointed as per the instructions of the OL will submit a report on the affairs of the Company. The Company has to also submit some details to the office of the OL. The OL shall prepare his report and submit to the Hon’ble High Court / Government Counsel.

23. The matter would now be taken up for hearing before the Hon’ble High Court. The Hon’ble High Court would consider the arguments from both the sides and depending on the merits of the case, would issue an order. I assume that the Hon’ble High Court has approved the Scheme of Amalgamation.

24. File the Hon’ble High Court Order with ROC in Form No. 21. The merger becomes effective once the Hon’ble High Court Order is filed with the ROC.

25. Some States require payment of stamp duty or proof that an application has been made for adjudication of stamp duty with the stamp office before filing of Form 21. In such cases, Form 21 can be filed only after compliance for the same has been done.

26. The Transferee Company has to fix a Record Date for determining the name of shareholders who would be eligible for obtaining the shares of the Transferee Company.

27. The Transferee Company does allotment of shares to shareholders of the Transferor Company pursuant to the Scheme of Amalgamation.

28. The Transferee Company has to file Form No. 2 and Form No. 3 with the ROC for the above allotment of shares within 30 days of allotment.

In case any member has any query, I will be glad to respond to the same.