COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
230. Power to compromise or make arrangements with creditors and members.
(1) Where a compromise or arrangement is proposed—
(a) between a company and its creditors or any class of them; or
(b) between a company and its members or any class of them,
the Tribunal may, on the application of the company or of any creditor or member of the
company, or in the case of a company which is being wound up, of the liquidator, order a
meeting of the creditors or class of creditors, or of the members or class of members, as the
case may be, to be called, held and conducted in such manner as the Tribunal directs.
Explanation.—For the purposes of this sub-section, arrangement includes a
reorganisation of the company’s share capital by the consolidation of shares of different
classes or by the division of shares into shares of different classes, or by both of those
(2) The company or any other person, by whom an application is made under subsection
(1), shall disclose to the Tribunal by affidavit—
(a) all material facts relating to the company, such as the latest financial position
of the company, the latest auditor’s report on the accounts of the company and the
pendency of any investigation or proceedings against the company;
(b) reduction of share capital of the company, if any, included in the compromise
(c) any scheme of corporate debt restructuring consented to by not less than
seventy-five per cent. of the secured creditors in value, including—
(i) a creditor’s responsibility statement in the prescribed form;
(ii) safeguards for the protection of other secured and unsecured creditors;
(iii) report by the auditor that the fund requirements of the company after
the corporate debt restructuring as approved shall conform to the liquidity test
based upon the estimates provided to them by the Board;
(iv) where the company proposes to adopt the corporate debt restructuring
guidelines specified by the Reserve Bank of India, a statement to that effect; and
(v) a valuation report in respect of the shares and the property and all assets,
tangible and intangible, movable and immovable, of the company by a registered
(3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal
under sub-section (1), a notice of such meeting shall be sent to all the creditors or class of
creditors and to all the members or class of members and the debenture-holders of the
company, individually at the address registered with the company which shall be
accompanied by a statement disclosing the details of the compromise or arrangement, a
copy of the valuation report, if any, and explaining their effect on creditors, key managerial
personnel, promoters and non-promoter members, and the debenture-holders and the
effect of the compromise or arrangement on any material interests of the directors of the
company or the debenture trustees, and such other matters as may be prescribed:
Provided that such notice and other documents shall also be placed on the website of the
company, if any, and in case of a listed company, these documents shall be sent to the Securities
and Exchange Board and stock exchange where the securities of the companies are listed, for
placing on their website and shall also be published in newspapers in such manner as may be
Provided further that where the notice for the meeting is also issued by way of an
advertisement, it shall indicate the time within which copies of the compromise or arrangement
shall be made available to the concerned persons free of charge from the registered office of the
(4) A notice under sub-section (3) shall provide that the persons to whom the notice is sent
may vote in the meeting either themselves or through proxies or by postal ballot to the adoption
of the compromise or arrangement within one month from the date of receipt of such notice:
Provided that any objection to the compromise or arrangement shall be made only by
persons holding not less than ten per cent. of the shareholding or having outstanding debt
amounting to not less than five per cent. of the total outstanding debt as per the latest audited
(5) A notice under sub-section (3) along with all the documents in such form as may be
prescribed shall also be sent to the Central Government, the income-tax authorities, the Reserve
Bank of India, the Securities and Exchange Board, the Registrar, the respective stock exchanges,
the Official Liquidator, the Competition Commission of India established under sub-section (1) of
section 7 of the Competition Act, 2002, if necessary, and such other sectoral regulators or authorities
which are likely to be affected by the compromise or arrangement and shall require that
representations, if any, to be made by them shall be made within a period of thirty days from the
date of receipt of such notice, failing which, it shall be presumed that they have no representations
to make on the proposals.
(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing
three-fourths in value of the creditors, or class of creditors or members or class of members, as the
case may be, voting in person or by proxy or by postal ballot, agree to any compromise or
arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order,
the same shall be binding on the company, all the creditors, or class of creditors or members or
class of members, as the case may be, or, in case of a company being wound up, on the liquidator
and the contributories of the company.
(7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the
following matters, namely:—
(a) where the compromise or arrangement provides for conversion of
preference shares into equity shares, such preference shareholders shall be given
an option to either obtain arrears of dividend in cash or accept equity shares
equal to the value of the dividend payable;
(b) the protection of any class of creditors;
(c) if the compromise or arrangement results in the variation of the shareholders’
rights, it shall be given effect to under the provisions of section 48;
(d) if the compromise or arrangement is agreed to by the creditors under
sub-section (6), any proceedings pending before the Board for Industrial and Financial
Reconstruction established under section 4 of the Sick Industrial Companies (Special
Provisions) Act, 1985 shall abate;
(e) such other matters including exit offer to dissenting shareholders, if any, as
are in the opinion of the Tribunal necessary to effectively implement the terms of the
compromise or arrangement:
Provided that no compromise or arrangement shall be sanctioned by the Tribunal
unless a certificate by the company's auditor has been filed with the Tribunal to the effect
that the accounting treatment, if any, proposed in the scheme of compromise or arrangement
is in conformity with the accounting standards prescribed under section 133.
(8) The order of the Tribunal shall be filed with the Registrar by the company within
a period of thirty days of the receipt of the order.
(9) The Tribunal may dispense with calling of a meeting of creditor or class of
creditors where such creditors or class of creditors, having at least ninety per cent. value,
agree and confirm, by way of affidavit, to the scheme of compromise or arrangement.
(10) No compromise or arrangement in respect of any buy-back of securities under
this section shall be sanctioned by the Tribunal unless such buy-back is in accordance
with the provisions of section 68.
(11) Any compromise or arrangement may include takeover offer made in such manner
as may be prescribed:
Provided that in case of listed companies, takeover offer shall be as per the regulations
framed by the Securities and Exchange Board.
(12) An aggrieved party may make an application to the Tribunal in the event of any
grievances with respect to the takeover offer of companies other than listed companies in
such manner as may be prescribed and the Tribunal may, on application, pass such order
as it may deem fit.
Explanation.—For the removal of doubts, it is hereby declared that the provisions
of section 66 shall not apply to the reduction of share capital effected in pursuance of the
order of the Tribunal under this section.
231.Power of Tribunal to enforce compromise or arrangement.
(1) Where the Tribunal makes an order under section 230 sanctioning a
compromise or an arrangement in respect of a company, it—
(a) shall have power to supervise the implementation of the compromise or
(b) may, at the time of making such order or at any time thereafter, give such
directions in regard to any matter or make such modifications in the compromise or
arrangement as it may consider necessary for the proper implementation of the
compromise or arrangement.
(2) If the Tribunal is satisfied that the compromise or arrangement sanctioned under
section 230 cannot be implemented satisfactorily with or without modifications, and the
company is unable to pay its debts as per the scheme, it may make an order for winding up
the company and such an order shall be deemed to be an order made under section 273.
(3) The provisions of this section shall, so far as may be, also apply to a company in
respect of which an order has been made before the commencement of this Act sanctioning
a compromise or an arrangement.
232.Merger and amalgamation of companies.
(1) Where an application is made to the Tribunal under section 230 for the
sanctioning of a compromise or an arrangement proposed between a company and any
such persons as are mentioned in that section, and it is shown to the Tribunal—
(a) that the compromise or arrangement has been proposed for the purposes
of, or in connection with, a scheme for the reconstruction of the company or
companies involving merger or the amalgamation of any two or more companies; and
(b) that under the scheme, the whole or any part of the undertaking, property
or liabilities of any company (hereinafter referred to as the transferor company) is
required to be transferred to another company (hereinafter referred to as the transferee
company), or is proposed to be divided among and transferred to two or more
the Tribunal may on such application, order a meeting of the creditors or class of creditors
or the members or class of members, as the case may be, to be called, held and conducted
in such manner as the Tribunal may direct and the provisions of sub-sections (3) to (6) of
section 230 shall apply mutatis mutandis.
(2) Where an order has been made by the Tribunal under sub-section (1), merging
companies or the companies in respect of which a division is proposed, shall also be
required to circulate the following for the meeting so ordered by the Tribunal, namely:—
(a) the draft of the proposed terms of the scheme drawn up and adopted by the
directors of the merging company;
(b) confirmation that a copy of the draft scheme has been filed with the Registrar;
(c) a report adopted by the directors of the merging companies explaining
effect of compromise on each class of shareholders, key managerial personnel,
promotors and non-promoter shareholders laying out in particular the share exchange
ratio, specifying any special valuation difficulties;
(d) the report of the expert with regard to valuation, if any;
(e) a supplementary accounting statement if the last annual accounts of any of
the merging company relate to a financial year ending more than six months before
the first meeting of the company summoned for the purposes of approving the
(3) The Tribunal, after satisfying itself that the procedure specified in sub-sections
(1) and (2) has been complied with, may, by order, sanction the compromise or arrangement
or by a subsequent order, make provision for the following matters, namely:—
(a) the transfer to the transferee company of the whole or any part of the
undertaking, property or liabilities of the transferor company from a date to be
determined by the parties unless the Tribunal, for reasons to be recorded by it in
writing, decides otherwise;
(b) the allotment or appropriation by the transferee company of any shares,
debentures, policies or other like instruments in the company which, under the
compromise or arrangement, are to be allotted or appropriated by that company to or
for any person:
Provided that a transferee company shall not, as a result of the compromise or
arrangement, hold any shares in its own name or in the name of any trust whether on
its behalf or on behalf of any of its subsidiary or associate companies and any such
shares shall be cancelled or extinguished;
(c) the continuation by or against the transferee company of any legal
proceedings pending by or against any transferor company on the date of transfer;
(d) dissolution, without winding-up, of any transferor company;
(e) the provision to be made for any persons who, within such time and in such
manner as the Tribunal directs, dissent from the compromise or arrangement;
(f) where share capital is held by any non-resident shareholder under the
foreign direct investment norms or guidelines specified by the Central Government
or in accordance with any law for the time being in force, the allotment of shares of
the transferee company to such shareholder shall be in the manner specified in the
(g) the transfer of the employees of the transferor company to the transferee
(h) where the transferor company is a listed company and the transferee
company is an unlisted company,—
(A) the transferee company shall remain an unlisted company until it
becomes a listed company;
(B) if shareholders of the transferor company decide to opt out of the
transferee company, provision shall be made for payment of the value of shares
held by them and other benefits in accordance with a pre-determined price
formula or after a valuation is made, and the arrangements under this provision
may be made by the Tribunal:
Provided that the amount of payment or valuation under this clause for any
share shall not be less than what has been specified by the Securities and Exchange
Board under any regulations framed by it;
(i) where the transferor company is dissolved, the fee, if any, paid by the
transferor company on its authorised capital shall be set-off against any fees payable
by the transferee company on its authorised capital subsequent to the amalgamation;
(j) such incidental, consequential and supplemental matters as are deemed
necessary to secure that the merger or amalgamation is fully and effectively carried
Provided that no compromise or arrangement shall be sanctioned by the
Tribunal unless a certificate by the company’s auditor has been filed with the Tribunal
to the effect that the accounting treatment, if any, proposed in the scheme of
compromise or arrangement is in conformity with the accounting standards prescribed
under section 133.
(4) Where an order under this section provides for the transfer of any property or
liabilities, then, by virtue of the order, that property shall be transferred to the transferee
company and the liabilities shall be transferred to and become the liabilities of the transferee
company and any property may, if the order so directs, be freed from any charge which
shall by virtue of the compromise or arrangement, cease to have effect.
(5) Every company in relation to which the order is made shall cause a certified copy
of the order to be filed with the Registrar for registration within thirty days of the receipt of
certified copy of the order.
(6) The scheme under this section shall clearly indicate an appointed date from
which it shall be effective and the scheme shall be deemed to be effective from such date
and not at a date subsequent to the appointed date.
(7) Every company in relation to which the order is made shall, until the completion
of the scheme, file a statement in such form and within such time as may be prescribed with
the Registrar every year duly certified by a chartered accountant or a cost accountant or a
company secretary in practice indicating whether the scheme is being complied with in
accordance with the orders of the Tribunal or not.
(8) If a transferor company or a transferee company contravenes the provisions of
this section, the transferor company or the transferee company, as the case may be, shall
be punishable with fine which shall not be less than one lakh rupees but which may extend
to twenty-five lakh rupees and every officer of such transferor or transferee company who
is in default, shall be punishable with imprisonment for a term which may extend to one
year or with fine which shall not be less than one lakh rupees but which may extend to
three lakh rupees, or with both.
Explanation.—For the purposes of this section,—
(i) in a scheme involving a merger, where under the scheme the undertaking,
property and liabilities of one or more companies, including the company in respect
of which the compromise or arrangement is proposed, are to be transferred to another
existing company, it is a merger by absorption, or where the undertaking, property
and liabilities of two or more companies, including the company in respect of which
the compromise or arrangement is proposed, are to be transferred to a new company,
whether or not a public company, it is a merger by formation of a new company;
(ii) references to merging companies are in relation to a merger by absorption,
to the transferor and transferee companies, and, in relation to a merger by formation
of a new company, to the transferor companies;
(iii) a scheme involves a division, where under the scheme the undertaking,
property and liabilities of the company in respect of which the compromise or
arrangement is proposed are to be divided among and transferred to two or more
companies each of which is either an existing company or a new company; and
(iv) property includes assets, rights and interests of every description and
liabilities include debts and obligations of every description.
233.Merger or amalgamation of certain companies.
(1) 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:—
(a) 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;
(b) 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;
(c) 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
(d) 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.
(2) 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.
(3) 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.
(4) 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:
Provided that if no such communication is made, it shall be presumed that he has no
objection to the scheme.
(5) 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 sub-section (2) stating its objections and requesting
that the Tribunal may consider the scheme under section 232.
(6) 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:
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.
(7) 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.
(8) 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
(9) The registration of the scheme shall have the following effects, namely:—
(a) 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;
(b) 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
(c) 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.
(10) 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.
(11) 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:
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
(12) 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 clause (b) of subsection
(1) of section 232.
(13) The Central Government may provide for the merger or amalgamation of
companies in such manner as may be prescribed.
(14) A company covered under this section may use the provisions of section 232 for
the approval of any scheme for merger or amalgamation.
234.Merger or amalgamation of company with foreign company.
(1) The provisions of this Chapter unless otherwise provided under any other
law for the time being in force, shall apply mutatis mutandis to schemes of mergers and
amalgamations between companies registered under this Act and companies incorporated
in the jurisdictions of such countries as may be notified from time to time by the Central
Provided that the Central Government may make rules, in consultation with the
Reserve Bank of India, in connection with mergers and amalgamations provided under this
(2) Subject to the provisions of any other law for the time being in force, a foreign
company, may with the prior approval of the Reserve Bank of India, merge into a company
registered under this Act or vice versa and the terms and conditions of the scheme of
merger may provide, among other things, for the payment of consideration to the
shareholders of the merging company in cash, or in Depository Receipts, or partly in cash
and partly in Depository Receipts, as the case may be, as per the scheme to be drawn up
for the purpose.
Explanation.—For the purposes of sub-section (2), the expression “foreign
company” means any company or body corporate incorporated outside India whether
having a place of business in India or not.
235.Power to acquire shares of shareholders dissenting from scheme or contract approved by majority.
(1) Where a scheme or contract involving the transfer of shares or any class of
shares in a company (the transferor company) to another company (the transferee company)
has, within four months after making of an offer in that behalf by the transferee company,
been approved by the holders of not less than nine-tenths in value of the shares whose
transfer is involved, other than shares already held at the date of the offer by, or by a
nominee of the transferee company or its subsidiary companies, the transferee company
may, at any time within two months after the expiry of the said four months, give notice in
the prescribed manner to any dissenting shareholder that it desires to acquire his shares.
(2) Where a notice under sub-section (1) is given, the transferee company shall,
unless on an application made by the dissenting shareholder to the Tribunal, within one
month from the date on which the notice was given and the Tribunal thinks fit to order
otherwise, be entitled to and bound to acquire those shares on the terms on which, under
the scheme or contract, the shares of the approving shareholders are to be transferred to
the transferee company.
(3) Where a notice has been given by the transferee company under sub-section (1)
and the Tribunal has not, on an application made by the dissenting shareholder, made an
order to the contrary, the transferee company shall, on the expiry of one month from the
date on which the notice has been given, or, if an application to the Tribunal by the
dissenting shareholder is then pending, after that application has been disposed of, send
a copy of the notice to the transferor company together with an instrument of transfer, to
be executed on behalf of the shareholder by any person appointed by the transferor
company and on its own behalf by the transferee company, and pay or transfer to the
transferor company the amount or other consideration representing the price payable by
the transferee company for the shares which, by virtue of this section, that company is
entitled to acquire, and the transferor company shall—
(a) thereupon register the transferee company as the holder of those shares;
(b) within one month of the date of such registration, inform the dissenting
shareholders of the fact of such registration and of the receipt of the amount or other
consideration representing the price payable to them by the transferee company.
(4) Any sum received by the transferor company under this section shall be paid into
a separate bank account, and any such sum and any other consideration so received shall
be held by that company in trust for the several persons entitled to the shares in respect of
which the said sum or other consideration were respectively received and shall be disbursed
to the entitled shareholders within sixty days.
(5) In relation to an offer made by a transferee company to shareholders of a transferor
company before the commencement of this Act, this section shall have effect with the
following modifications, namely:—
(a) in sub-section (1), for the words “the shares whose transfer is involved
other than shares already held at the date of the offer by, or by a nominee of, the
transferee company or its subsidiaries,”, the words “the shares affected” shall be
(b) in sub-section (3), the words “together with an instrument of transfer, to be
executed on behalf of the shareholder by any person appointed by the transferee
company and on its own behalf by the transferor company” shall be omitted.
Explanation.—For the purposes of this section, “dissenting shareholder” includes
a shareholder who has not assented to the scheme or contract and any shareholder who
has failed or refused to transfer his shares to the transferee company in accordance with
the scheme or contract.
236.Purchase of minority shareholding.
(1) In the event of an acquirer, or a person acting in concert with such acquirer,
becoming registered holder of ninety per cent. or more of the issued equity share capital of
a company, or in the event of any person or group of persons becoming ninety per cent.
majority or holding ninety per cent. of the issued equity share capital of a company, by
virtue of an amalgamation, share exchange, conversion of securities or for any other
reason, such acquirer, person or group of persons, as the case may be, shall notify the
company of their intention to buy the remaining equity shares.
(2) The acquirer, person or group of persons under sub-section (1) shall offer to the
minority shareholders of the company for buying the equity shares held by such
shareholders at a price determined on the basis of valuation by a registered valuer in
accordance with such rules as may be prescribed.
(3) Without prejudice to the provisions of sub-sections (1) and (2), the minority
shareholders of the company may offer to the majority shareholders to purchase the
minority equity shareholding of the company at the price determined in accordance with
such rules as may be prescribed under sub-section (2).
(4) The majority shareholders shall deposit an amount equal to the value of shares to
be acquired by them under sub-section (2) or sub-section (3), as the case may be, in a
separate bank account to be operated by the transferor company for at least one year for
payment to the minority shareholders and such amount shall be disbursed to the entitled
shareholders within sixty days:
Provided that such disbursement shall continue to be made to the entitled shareholders
for a period of one year, who for any reason had not been made disbursement
within the said period of sixty days or if the disbursement have been made within the
aforesaid period of sixty days, fail to receive or claim payment arising out of such
(5) In the event of a purchase under this section, the transferor company shall
act as a transfer agent for receiving and paying the price to the minority shareholders
and for taking delivery of the shares and delivering such shares to the majority, as the case
(6) In the absence of a physical delivery of shares by the shareholders within the
time specified by the company, the share certificates shall be deemed to be cancelled, and
the transferor company shall be authorised to issue shares in lieu of the cancelled shares
and complete the transfer in accordance with law and make payment of the price out of
deposit made under sub-section (4) by the majority in advance to the minority by despatch
of such payment.
(7) In the event of a majority shareholder or shareholders requiring a full purchase
and making payment of price by deposit with the company for any shareholder or
shareholders who have died or ceased to exist, or whose heirs, successors, administrators
or assignees have not been brought on record by transmission, the right of such
shareholders to make an offer for sale of minority equity shareholding shall continue and
be available for a period of three years from the date of majority acquisition or majority
(8) Where the shares of minority shareholders have been acquired in pursuance of
this section and as on or prior to the date of transfer following such acquisition, the
shareholders holding seventy-five per cent. or more minority equity shareholding negotiate
or reach an understanding on a higher price for any transfer, proposed or agreed upon, of
the shares held by them without disclosing the fact or likelihood of transfer taking place on
the basis of such negotiation, understanding or agreement, the majority shareholders
shall share the additional compensation so received by them with such minority
shareholders on a pro rata basis.
Explanation.—For the purposes of this section, the expressions “acquirer” and
“person acting in concert” shall have the meanings respectively assigned to them in
clause (b) and clause (e) of sub-regulation (1) of regulation 2 of the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
(9) When a shareholder or the majority equity shareholder fails to acquire full
purchase of the shares of the minority equity shareholders, then, the provisions of this
section shall continue to apply to the residual minority equity shareholders, even though,—
(a) the shares of the company of the residual minority equity shareholder had
been delisted; and
(b) the period of one year or the period specified in the regulations made by the
Securities and Exchange Board under the Securities and Exchange Board of India
Act, 1992, had elapsed.
237.Power of Central Government to provide for amalgamation of companies in public interest.
(1) Where the Central Government is satisfied that it is essential in the public
interest that two or more companies should amalgamate, the Central Government may, by
order notified in the Official Gazette, provide for the amalgamation of those companies into
a single company with such constitution, with such property, powers, rights, interests,
authorities and privileges, and with such liabilities, duties and obligations, as may be
specified in the order.
(2) The order under sub-section (1) may also provide for the continuation by or
against the transferee company of any legal proceedings pending by or against any
transferor company and such consequential, incidental and supplemental provisions as
may, in the opinion of the Central Government, be necessary to give effect to the
(3) Every member or creditor, including a debenture holder, of each of the transferor
companies before the amalgamation shall have, as nearly as may be, the same interest in or
rights against the transferee company as he had in the company of which he was originally
a member or creditor, and in case the interest or rights of such member or creditor in or
against the transferee company are less than his interest in or rights against the original
company, he shall be entitled to compensation to that extent, which shall be assessed by
such authority as may be prescribed and every such assessment shall be published in the
Official Gazette, and the compensation so assessed shall be paid to the member or creditor
concerned by the transferee company.
(4) Any person aggrieved by any assessment of compensation made by the prescribed
authority under sub-section (3) may, within a period of thirty days from the date of
publication of such assessment in the Official Gazette, prefer an appeal to the Tribunal and
thereupon the assessment of the compensation shall be made by the Tribunal.
(5) No order shall be made under this section unless—
(a) a copy of the proposed order has been sent in draft to each of the companies
(b) the time for preferring an appeal under sub-section (4) has expired, or
where any such appeal has been preferred, the appeal has been finally disposed off;
(c) the Central Government has considered, and made such modifications, if
any, in the draft order as it may deem fit in the light of suggestions and objections
which may be received by it from any such company within such period as the
Central Government may fix in that behalf, not being less than two months from the
date on which the copy aforesaid is received by that company, or from any class of
shareholders therein, or from any creditors or any class of creditors thereof.
(6) The copies of every order made under this section shall, as soon as may be after
it has been made, be laid before each House of Parliament.
238. Registration of offer of schemes involving transfer of shares.
(1) In relation to every offer of a scheme or contract involving the transfer of
shares or any class of shares in the transferor company to the transferee company under
(a) every circular containing such offer and recommendation to the members
of the transferor company by its directors to accept such offer shall be accompanied
by such information and in such manner as may be prescribed;
(b) every such offer shall contain a statement by or on behalf of the transferee
company, disclosing the steps it has taken to ensure that necessary cash will be
(c) every such circular shall be presented to the Registrar for registration and
no such circular shall be issued until it is so registered:
Provided that the Registrar may refuse, for reasons to be recorded in writing, to
register any such circular which does not contain the information required to be given
under clause (a) or which sets out such information in a manner likely to give a false
impression, and communicate such refusal to the parties within thirty days of the application.
(2) An appeal shall lie to the Tribunal against an order of the Registrar refusing to
register any circular under sub-section (1).
(3) The director who issues a circular which has not been presented for registration
and registered under clause (c) of sub-section (1), shall be punishable with fine which
shall not be less than twenty-five thousand rupees but which may extend to five lakh
239. Preservation of books and papers of amalgamated companies.
The books and papers of a company which has been amalgamated with, or
whose shares have been acquired by, another company under this Chapter shall not be
disposed of without the prior permission of the Central Government and before granting
such permission, that Government may appoint a person to examine the books and papers
or any of them for the purpose of ascertaining whether they contain any evidence of the
commission of an offence in connection with the promotion or formation, or the management
of the affairs, of the transferor company or its amalgamation or the acquisition of its
240.Liability of officers in respect of offences committed prior to merger, amalgamation, etc.
Notwithstanding anything in any other law for the time being in force, the
liability in respect of offences committed under this Act by the officers in default, of the
transferor company prior to its merger, amalgamation or acquisition shall continue after
such merger, amalgamation or acquisition.