Companies (compromises, arrangements and amalgamations) Amendment Rules 2021


Quick Summary
The Ministry of Corporate Affairs has introduced the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021. These new rules, effective from their publication date, update the 2016 regulations. Notably, they introduce provisions allowing start-up companies to merge or amalgamate with other start-ups or small companies under specific conditions outlined in section 233 of the Companies Act.

MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 1st February, 2021

G.S.R. 93(E). - In exercise of the powers conferred by sub-sections (1) and (2) of section 469 read with sections 230 to 233 and sections 235 to 240 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 namely :-

1. Short title and commencement.‐

(1) These rules may be called the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021.
(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, in rule 25, after sub-rule (1) the following sub-rule shall be inserted, namely:-

“(1A) A scheme of merger or amalgamation under section 233 of the Act may be entered into between any of the following class of companies, namely:-

(i) two or more start-up companies; or
(ii) one or more start-up company with one or more small company.

Explanation.- For the purposes of this sub-rule, “start-up company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognised as such in accordance with notification number G.S.R. 127 (E), dated the 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade.”

[F. No. 2/31/CAA/2013-CL.V]
K. V. R. MURTY, Jt. Secy.

Note: The The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1134(E), dated the 14th December, 2016, and subsequently amended vide notification number G.S.R. 368(E), dated the 13th April 2017 and vide notification number G.S.R. 79(E), dated the 3rd February, 2020 and last amended vide notification number G.S.R. 773(E) dated 17th December, 2020.

FAQ :

The amendment rules update the existing Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, specifically introducing new provisions for mergers and amalgamations involving start-up companies.

These rules shall come into force on the date of their publication in the Official Gazette.

A scheme of merger or amalgamation under section 233 of the Act can now be entered into between two or more start-up companies, or between one or more start-up company with one or more small company.

A 'start-up company' is defined as a private company incorporated under the Companies Act, 2013 or 1956, and recognised as such according to notification number G.S.R. 127 (E), dated 19th February, 2019.

These new merger and amalgamation provisions for start-ups and small companies relate to section 233 of the Companies Act.

 
Notification No : F. No. 2/31/CAA/2013-CL.V
Source : http://www.mca.gov.in/Ministry/pdf/AmalgamationsAmndtRules_02022021.pdf



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