Stepwise process / Checklist for Scheme of Amalgamations

Stepwise process / Checklist for Scheme of Amalgamations under Companies Act, 2013 and SEBI Regulations

Regulatory Framework

•       Companies Act, 2013 – [Sec 230-232]

•       National Company Law Tribunal Rules, 2016

•       Foreign Exchange Management Act, 1999

•       Indian Accounting Standards

•       Indian Stamp Act 1899, as applicable to relevant State

•       Competition Act, 2002

•       Income Tax Act, 1961

•       SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

•       SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

•       SEBI Circular(s) on Scheme of Amalgamations

Approvals required

•       Board of Directors of the companies

•       SEBI / Stock exchange(s), where the companies are listed

•       Shareholders of the companies

•       Creditors of the companies

•       National Company Law Tribunal

•       Reserve Bank of India & Competition Commission, if required

Documents required

•       Memorandum and Articles of Association of the companies

•       Audited Financials

•       Statutory Records of transferor company(ies) till date.

•       Minute Books transferor company(ies) till date.

•       List of Directors

•       List of Shareholders / Shareholding Pattern

Stepwise procedure

Board Approval

•       Listed Company(ies) to intimate the date of the Board Meeting in which the in-principle proposal for amalgamation will be considered to the stock exchange(s) 

•       Convene the Board Meetings of Transferor / Transferee companies for considering the proposal of amalgamation

o   In-principle approval for amalgamation

o   Appoint Chartered Accountants for valuation

o   Registered valuer / Merchant Bankers for fairness opinion

o   Company Secretaries / Advocates for representing the matter before the Hon’ble NCLT

o   Delegate powers to a sub-committee of the Board, if any.

•   Listed Company(ies) to disclose the outcome of the Board Meeting to the stock exchange(s)

•  Independent Valuation and Fairness Opinion to be obtained; Draft Scheme of Amalgamation to be ready

•       Listed Company(ies) to intimate the date of the Board Meeting in which the Scheme of Amalgamation and Share Exchange Ratio would be considered

•       Conduct Audit Committee / Board Meetings of the Companies for considering

o   Valuation Report

o   Fairness Opinion

o   Designated Stock Exchange

•   Listed Company(ies) to disclose the outcome of the Board Meeting to the stock exchange(s)

o   Share Exchange Ratio & other details as per continuous disclosure requirements Reg. 30 of SEBI (LODR) Regulations, 2015 (Part A of Schedule III)

Stock Exchange / SEBI approval

•    Listed company(ies) not to file the Scheme with NCLT without obtaining Observation Letter / No Objection letter from the stock exchange(s)

•     Application to the Stock exchange(s) where the companies are listed under Reg.37 for obtaining Observation Letter / No Objection letter to the proposed Scheme.

•      Application to be accompanied by the documents specified in SEBI Circular on Scheme of Arrangements.

•  Documents submitted to the stock exchange(s) to be uploaded on the Company’s website.

•     Provide response to clarifications sought by the stock exchange(s), if any.

•   Obtain Observation Letter / No Objection letter from the stock exchange(s) to the proposed Scheme of Amalgamation

•     Upload the Observation Letter / No Objection letter on the Company’s website within 24 hours of receipt

NCLT Approval

•  Application to NCLT seeking directions, inter alia, for dispensing / convening shareholders’ and creditors’ meetings; publishing advertisements; appointment of chairpersons.

•      Obtain NOC from Secured Creditors.

•      Obtain Orders from NCLT.

•       If ordered for convening the meetings, convene board meetings to seek approval of -

o   Supplementary accounting statements, if required.

o   Approval of the Notices of the Tribunal Convened Meetings to be issued to the shareholders and creditors

o   Notice to be issued pursuant to SEBI Circular on Scheme of Arrangements seeking approval of Public Shareholders through e-voting

•       Printing and Dispatch of Notices to shareholders / creditors – physical and electronic

o   Notice with all documents to be sent to the offices of ROC, Official Liquidator, Central Government (Regional Director), Income Tax authorities, RBI, Stock exchange(s) and any other regulatory authorities, as directed by NCLT. 

•    Intimate stock exchange(s) on the dispatch of notices and also submit the notices to the stock exchange(s).

•      Upload the complete Notice(s) on the Company’s website

•      Publication of advertisement in Newspapers about the meetings  

•    Upload the newspaper advertisement the Company’s website and submit the same to the stock exchange(s) 

•      Convene the meetings / e-voting

o   NCLT convened meeting Resolution(s) to be passed with Special Majority, i.e., majority of members present (more than 50%) and holding 3/4^th in value of voting rights. Result to be decided through Poll and also E-voting for Listed entities.

o   SEBI requirement - Postal Ballot / e-voting - votes cast by the public shareholders in favour are more than the number of votes cast by the public shareholders against it – E-voting (Postal Ballot may also be provided).

•    Outcome of Meetings / E-voting to be intimated to the stock exchange(s) within 48 hours of conclusion of the Meeting.

•     Submit responses to any information / clarifications sought by the Official Liquidator and Central Government (RD Office)

•      Reports of the Chairman to be submitted to the NCLT along with the attendance slips & proxy forms in original within 7 days from the date of holding the meeting.

•      Company Petitions seeking orders of the NCLT for amalgamation of the companies to be filed with the NCLT within 7 days from the date of filing of the Chairman’s report.

•       Filing of MGT-14 with ROC within 30 days of approval of the Resolutions.

•       Date of hearing to be fixed by NCLT Registry

•       Obtain NOCs from Income Tax authorities / RBI / CCI, if required.

•       Publish Notice of Hearing in the newspapers seeking objections, if any, to the Scheme.

•       Upload the newspaper advertisement the Company’s website and submit the same to the stock exchanges

•       Counsel to file the responses to the Notice with NCLT. 

•       Petition to be admitted by NCLT and notices to be served on Official Liquidator and Central Government (Regional Director).

•       Submission of reports on the Scheme by the offices of the Regional Director and the Official Liquidator to the NCLT.

•       Hearing of the matter by the NCLT.

•       NCLT to pronounce the Orders.

Post NCLT approval

•       Obtain Certified True Copy of the Order from the NCLT.

•       Payment of Stamp Duty, as per the Stamp Act, if required.

o   Adjudication of the Court Order

o   Payment

•       Inform SEBI / Stock exchange(s) on receipt of the Order

•       Post receipt of the Certified True Copy of the Order, documents to be sent to the Designated Stock Exchange, as per SEBI Circular on Amalgamations.

•       Filing of INC 28, along with Stamp Duty payment challan with the ROC.

•    Stock Exchange(s) to take note of NCLT Order and inform the Company.

•       Board to note the NCLT Order and fix the Record Date

•       Intimate Record Date to Stock exchange(s) (7 working days’ notice)

•       Allotment of shares

•       Intimation to the Stock Exchange(s) on Allotment

•       Admit new shares issued with the Depositories

•       Listing Application to the Stock Exchange(s)

•       Submit FC-GPR through Authorized Dealer Bank, if required.

•       File PAS-3 with the ROC within 30 days of Allotment.

•       Obtain Listing and Trading approval

•   Intimations to all other concerned offices, including statutory authorities, with Certified copies of NCLT orders.

•       Any specific compliances stipulated in the Amalgamation Order to be adhered to.