Chapter-6A-Charts on Compromise & Arrangement

Compromise & Arrangement-Special on Sec 230

Company/Member/ NCLT
Creditors/Liquidator Submission of Draft Scheme to

Refer Note

Submission of Affidavit to Tribunal containing

1. M: -………………………………………………………………….
2. A: …………………………………………………………………...
3. F: -………………………………………………………………….
4. I: -…………………………………………………………………...

Tribunal may dispense with

meeting of creditors, if 90% or
more in value agrees by
affidavit to such C/A NCLT may by order

1. ………………………………………….
What is 100% members providing their
consent, whether meeting of members may be 2. ………………………………………….
avoided???
As per the view expressed by Principal Bench of 3. ………………………………………….
NCLT
……………………………………………….. 4. ………………………………………….
………………………………………………..
………………………………………………..

Notice to be despatched to ……………………along with

C D E Despatch of Newspaper
Notice Advertisement

Despatch of notice to Statutory Authority

(SEBI/RBI/IT/STX/CCI) as well

Their representation to be received within 30 days from receipt of notice, Else assumed that they have
no objection

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Compromise & Arrangement-Special on Sec 230

In Class Meeting, Scheme Shall be approved by such Members/Creditors, who are

majority in number & also hold 3/4th in value
amongst those who are present & Voting or Participating through Postal Ballot

Application to NCLT to sanction such scheme

Chairperson shall report to NCLT Along with such Certificate from Auditor that
relevant AS are complied with

Along with order, tribunal shall also provide for all/any of

following

NCLT fixes date for hearing + order

C P E

NCLT may by order sanction the

scheme of C/A

To obtain Arrear of Accept Equity Shares

Dividend in cash upto value of
Dividend Filing to ROC Objection to be raised
: - Copy of Scheme by Sh.
: - Copy of NCLT/NCLAT Holder/Creditors
order (Refer Note)
: - E Form INC-28

NCLAT order By filing an

approval of appeal to NCLAT
scheme

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Compromise & Arrangement

Compromise & Arrangement-Special on Sec 230

Note No…………………………

Where Scheme of CDR is proposed along with Scheme of C/A

Which has been consented by Atleast 75% of Secured Creditors in Value, then following shall also be
submitted along with Scheme

Safeguard of V C R

Quest: - Decide whether scheme has been approved or not

Case No. Total Attended Holding Favour Holding Against Holding Absent Holding
Members by of of of Agent of
Attended Favour (in `) Absent
(in `) (in `) (in `)
1 1000 200 5 Lakh 70 4 Lakh 130 1 Lakh

2 1000 200 5 Lakh 101 4 Lakh 99 1 Lakh

3 500 200 5 Lakh 70 4 Lakh 30 10,000 100 90,000

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 Compromise & Arrangement

Compromise & Arrangement in nature of Amalgamation/Demerger

Sec 232-Amalgamation/Merger with prior approval of tribunal

Where an application is made to Tribunal u/s 230 & it is shown to Tribunal that

Scheme of compromise or &

Arrangement is proposed as All the properties, assets & liabilities or part
scheme of thereof of transferor company shall become assets
Amalgamation/Merger & liability of transferee company

NCLT may issue direction to follow procedure u/s 230 and also issue the following orders

Dissolution of transferor company Approval of scheme of amalgamation or

Without winding up merger, whereby order may be issued for

Continuat Purchase Transfer of Considerati Payment Transfer of Reverse

ion of consideratio assets & on to Non- to employee of Merger
legal n from Liab Resident dissenting transferor
proceedin Transferee transferee share- sharehold company to
g by or to co. holders, ers transferee
against Transferor who company
transferee invested in
company foreign
direct
investment

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Compromise & Arrangement

Compromise & Arrangement in nature of Amalgamation/Demerger

Reverse Merger
i.e., Where the transferor company is listed company and transferee company is an unlisted company,
NCLT may direct that
• Transferee company shall continue as unlisted company until it opts to become listed company
• Payment to dissenting shareholders who decide to opt out of transferee company
• No C/A u/s 230 shall be approved by tribunal unless a certificate from Auditor has been obtained
stating that AS have been duly complied
• Copy of order by tribunal shall be submitted to ROC within 30 days
Where an order has been made by the Tribunal merging companies, following shall also be required to be
circulated for the meeting so ordered by the Tribunal, namely: —

the draft of the proposed terms of the scheme drawn up and adopted by the directors
of the merging company;

confirmation that a copy of the draft scheme has been filed with the Registrar;

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;

Valuation report of expert, if any

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 scheme.

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 Compromise & Arrangement

Merger or Amalgamation of Certain Companies [ Sec 233]

Or
Fast Track Merger/Amalgamation
Or
Merger of 2 small companies
Or
Merger of company with its wholly owned subsidiary company

Company Liquidator

ROC

Notice of proposed scheme in CAA.9 to

submit their suggestion/objection-within
30 days

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Compromise & Arrangement

the objections and suggestions received from ROC & Liquidator are considered by the companies in
their respective general meetings and the scheme is approved by

Meeting of Members Members & Creditors

Approval By 90% of no of shares 9/10th in Value

ROC where
Registered office
is located

Form CAA 10

Each Company

ROC where
Form CAA 10 Registered office
is located

Each of the companies involved in the merger files a declaration of solvency, in the prescribed form, (Form
No.CAA.10) with the Registrar of the place where the registered office of the company is situated

CG

Transferee Submission within 7 days containing “Copy of

company Scheme + Result of meeting in CAA.11” Through
Registered Post/Speed Post to

ROC + O.L.

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ROC + O.L.

If have objection
Communicate to CG within CG to confirm the scheme
30 days through CAA.12
(Else it shall be assumed that
they have no objection)

If in opinion of CG also, scheme

is not in public interest/interest Order confirming to be
of creditors, it shall within 60 communicated to ROC of
days submit an application to transferee company and
Tribunal in CAA.13 concerned parties

Tribunal to consider the ROC of transferee to register

scheme u/s 232 the same and issue
confirmation to be
communicated to ROC of
transferor company

Company to also submit to their respective ROC

“Confirmation order” + INC-28

Within 30 Days

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Power to
Registration of Offer of Schemes Involving Transfer of Shares [Sec 238]

Transferee company Transferor company

i.e., Hindalco To Acquire
i.e. INDAL

Procedure u/s 238

1. Hindalco to draft proposal/odder in e form CAA.15
2. Registration with ROC of transferor company
3. Offer to INDAL
4. INDAL to circulate such offer to its shareholders on behalf of transferee

Justification Fund Recommendation

Information of
of price availability of directors of
transferee
with transferee transferee
company
company

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