Compliance under companies act while acquisition of pvt. company by another pvt company

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Renjith.R.s.

Renjith.R.s. (Querist)
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09 November 2021 Dear Sir,

Company 'A' a pvt ltd company which acquired another pvt ltd company "B' . Acquisition by way of acquiring shares of company 'B' on face value.

What are various compliance under companies act for such arrangement?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 When a private limited company (Company A) acquires another company (Company B) by acquiring its shares, several compliance requirements under the Companies Act, 2013 and other applicable laws must be considered. These include the approval of the board of directors, shareholders' approval, valuation of shares, filing with the Registrar of Companies (RoC), compliance with securities laws, and checking for sector-specific regulations. Post-acquisition steps include updating records, integrating operations, and communicating with employees, customers, suppliers, and other stakeholders about the acquisition. Legal due diligence is also necessary to identify potential liabilities or legal issues that may impact the acquisition process. Tax and accounting considerations must be assessed, including any stamp duty payable on share transfer. It is advisable to engage with legal and financial advisors to ensure compliance obligations are met effectively during and after the acquisition process.