Checklist For Merger

Checklist for Mergers And Amalgaamtions

The procedure for the amalgamation of two companies has to be viewed from the Transferor and Transferee Company. Therefore, the procedure has been divided into two parts i.e. procedure to followed by the transferor company and the transferee company respectively.

Steps To Be Followed By Transferee Company

 

1. Memorandum Of Association (M/A)
The Memorandum of Association must provide the power to amalgamate in its objects clause. It M/A is silent, amendment in M/A must take place.

2. Board Meeting

A Board Meeting shall be convened to consider and pass the following requisite resolutions:
- approve the draft scheme of amalgamation;
- to authorize filing of application to the court for directions to convene a general meeting;
- to file a petition for confirmation of scheme by the High Court.

3. Application To The Court
An application shall be made to the court for directions to convene a general meeting by way of Judge's summons supported by an affidavit. The proposed scheme of amalgamation must be attached to such affidavit.
Summons - Form No. 33
Affidavit - Form No. 34
The summons should be accompained by:
" A certified copy of the M&A of both companies
" A certified true copy of the latest audited B/S and P&L A/c of transferee company

4. Copy To Regional Director

A copy of application made to concerned H.C. shall also be sent to the R.D. of the region. Although, such notice is supposed to be sent by the H.C., usually the company sends it without waiting for the H.C. to send it.

5. Order Of High Court
On hearing of the summons, the H.C. shall pass the necessary orders which shall include:

" Time and place of the meeting
" Chairman of the meeting
" Fixing the quorum
" Procedure to be followed in the meeting for voting by the proxy
" Advertisement of notice of the meeting
" Time limit for the chairman to submit the report to the court regarding the result of the meeting
Orders in - Form No. 35

6. Notice Of The Meeting

The notice of the meeting shall be sent to the creditors and/or the shareholders individually by the chairman so appointed by registered post enclosing:

" A statement setting forth the following:
- Terms of amalgamation and its effects
- Any material interests of the director, MDs or Manager, in any capacity
- Effect of the arrangement on those interests.

" A copy of the proposed scheme of amalgamation
" A form of proxy
" Attendance slip
" Notice of the resolution for authorizing issue of shares to persons other than existing shareholders
Notice in - Form No. 36
Proxy in - Form No. 37

7. Advertisement Of Notice Of Meeting

The notice of the meeting shall be advertised in an English and Hindi N/P as the court may direct.
Advertisement in - Form No. 38

8. Notice To Stock Exchange
In case of the listed company, 3 copies of the notice of the general meeting alongwith enclosures shall be sent to the Stock Exchange where the company is listed.

9. Filing Of Affidavit For The Compliance
An affidavit not les than 7 days before the meeting shall be filed by the Chairman of the meeting with the Court showing that the directions regarding the issue of notices and advt. Have been duly complied with.

10. General Meeting

The General Meeting shall be held to pass the following resolutions:
" Approving the scheme of amalgamation by ¾th majority
" Special Resolution authorizing allotment of shares to persons other than existing shareholders or an ordinary resolution be passed subject to getting Central Government's approval for the allotment as per the provisions of Section 81(1A) of the Companies Act, 1956.
" The resolution to empower directors to dispose of the shares not taken up by the dissenting shareholders at their discretion.
" An ordinary/special resolution shall be passed to increase the Authorized share capital, if the proposed issue of shares exceeds the present authorized capital.
The decision of the meeting shall be ascertained only by taking a poll on resolutions.

11. Reporting Of Result Of The Meeting

The Chairman of the meeting shall report the result of the meeting to the court within the time fixed by the judge or within 7 days, as the case may be. A copy of proceedings of the meeting shall also be sent to the concerned Stock Exchange.
Report in - Form No. 39

12. Formalities With Roc
The following documents shall be filed with ROC along with the requisite filing fees:

" Form No. 23 of Companies General Rules & Forms + copy of Special Resolution
" Resolution approving the scheme of amalgamation
" Special resolution passed for the issue of shares to persons other than existing shareholders

13. Petition
For approval of the scheme of amalgamation, a petition shall be made to the H.C. within 7 days of the filing of report by the chairman.
Petition in - Form No. 40
Note:
" If the Regd. Offices of the companies are in same state - then both the companies may move jointly to the High Court.
" If the Regd. Offices of the companies are in different states - then each company shall move the petition in respective High Court for directions

14. Sanction Of The Scheme

The Court shall sanction the scheme on being satisfied that:
" The whole scheme is annexed to the notice for convening meeting. This provision is mandatory in nature
" The scheme should have been approved by the company by means of ¾th majority of the members present.
" The scheme should be genuine and bona fide and should not be against the interests of the creditors, the company and the public interest.
After satisfying itself, the court shall pass orders in the requisite form
Orders in - Form No. 41

15. Stamp Duty
A scheme sanctioned by the court is an instrument liable to stamp duty.

16. Filing With Roc
The following documents shall be filed with ROC within 30 days of order:
" A certified true copy of Court's Order
" Form No. 21 of Companies General Rules & Forms

17. Copy Of Order To Be Annexed
A copy of court's order shall be annexed to every copy of the Memorandum of Association issued after the certified copy of the order has been filed with as aforesaid.

18. Allotment Of Shares
A Board Resolution shall be passed for the allotment of shares to the shareholders in exchange of shares held in the transferor-company and to fix the record date for this purpose.
Steps To Be Followed By Transferor Company
The procedure as given above shall be followed by the transferor company.
The only exception  is that - there is no need for the transferor company to pass a special resolution for offering shares to the persons other than the existing shareholders and to file Form No. 23 of the Companies General Rules and Forms with the Registrar of Companies.

Activities	Month
		1st	2nd	3rd	4th	5th	6th
1	Due Diligence	xxx
2	Drafting of Schemes		xxx
3	Valuation of shares and issue of exchange ratio report in consultation with solicitors, tax experts and other legal experts.		xxx
4	Board Meeting		xxx
5	Notify The Stock Exchange about Board Meeting for the Merger.		xxx
6	Notification to Stock Exchanges, press release.		xxx
7	Intimate FII's Bank, Shareholders and other Secured Creditors and obtain their consent.		xxx
8	Appointment of Advocates/ Solicitors			xxx
9	Application to the Court for direction by way of Judges Summons to convene the Extraordinary General Meeting of Shareholders, Creditors & appoint Chairman for the same. If possible, obtain dispensation for calling of the meetings of Creditors.			xxx
10	Hearing with High Court for Acceptance of Applications for seeking exemptions for calling the meetings of shareholders and creditors and calling the meeting of Equity Shareholders and exemption from calling the meeting of Creditors.			xxx
11	Obtaining Copy of Minutes of Order.			xxx
12	Draft Notice, Proxy Form and Explanatory Statement to be approved by the Registrar of the Court.			xxx
13	Send notices for holding the meeting to pass the resolution enumerated below along with the Explanatory Statement required u/s 393 of the Co. Act.			xxx
14	Drafting of Advertisement in English & Vernacular newspapers regarding holding of the EGM.			xxx
15	Publication of Advertisement in English & Vernacular. Newspapers regarding holding of the EGM.			xxx
16	Chairman of the meeting to file affidavit regarding compliance with the court's directions for sending the notices to individual equity shareholders and publishing the notices in newspapers for calling the equity shareholders meetings.			xxx
17	To hold the General Meeting court Convened and pass the resolution.				xxx
18	File the special resolution mentioned above with the Registrar of Companies, Bombay within 30 days in Form No 23.				xxx
19	Filing of Chairman’s Report along with affidavit as to the Result of Meetings within 21 days of Holdings of the meetings.				xxx
20	File the petition with High Court for approval of the scheme within 7 days of filing of chairman’s reports of meeting immediately as there are no meetings to be called.				xxx
21	Hearing with High Court for Acceptance of Petition.				xxx
22	Obtaining Copy Minutes of Order for Petition.				xxx
23	Copy of notices to be submitted for approval to court registrar and sealing of notices to be filed with O/L, R/D				xxx
24	Obtaining sealed copy of notices to be served on O/L & R/D.				xxx
25	Filing of Notices with R/D along with copy of Petitions				xxx
26	Filing Notices with O/L along with copy of Petitions				xxx
27	Copy of Last 5 years Balance Sheet of Transferor Company along with Directors Report, Notice of Meetings, Auditors Report, Balance Sheet, Profit & Loss A/c with all schedules to be submitted to O/L for appointment of Auditors				xxx
28	Filing Copy of Petitions along with all the Exhibits with ROC for obtaining ROC Report to be forwarded by ROC to Regional Directors office.				xxx
29	Filing Copy of Petitions along with all the Exhibits with Govt Advocates (who appears on behalf of R/D				xxx
30	Obtaining copy of letter from Regional Directors office.
31	Filing of Documents called for by the Regional Directors Office.					xxx
32	Sending of Notices of final hearing of Petition to Secured Creditors, Unsecured Creditors & Trade Creditors				xxx
33	Publication of Notice of Final hearing of Petition in Newspapers and Govt Gazette in case if the court directs so.				xxx
34	Sending of Quotation by O/L for appointment of Auditors				xxx
35	Appointment of Auditor by High Court.					xxx
36	Completion of Audit and submission of Report by Auditor appointed by High Court.					xxx
37	Copy of ROC Report to be sends by ROC to Regional Director.					xxx
38	Final approval by office Regional Director					xxx
39	Final Hearings for sanctioning of the Scheme.					xxx
40	Order to be obtained from the Judge High Court for calling the meeting for settling the Draft copy of Order Sanctioning the Scheme.					xxx
41	Lodging of Draft Copy of Order Sanctioning the Scheme.					xxx
42	Calling of the Meeting of RD, O/L, and Court Registrar for settlement of draft.					xxx
43	Obtaining Final Order & Filing Certified copy of the sae with ROC in form No 21.					xxx
44	Working out stamp duty liabilities with Stamp Office with the help of lawyers						xxx
45	Copy of such order (certified) to be attached to every copy of the Memorandum & Articles of Association.						xxx
46	Take necessary steps to carry out the scheme of amalgamation as approved by the High Court issuing notices, allotting shares etc.						xxx
47	Inform Stock Exchange for passing of Final order for the merger.						xxx
48	Inform Stock Exchange for issue of shares in the Transferee Company						xxx
49	As soon as scheme becomes effective, particulars to be intimated through press and to Govt. authorities, banks, Creditors, customers & others						xxx
50	Accounting entries for giving effect to the Scheme of Amalgamation.						xxx
51	Co-ordinating with Companies Statutory Auditors for issue arising in course of Audit in relation to the Amalgamation.
52	Co-coordinating with the consultants of the company. (Income Tax, Sales Tax and Excise Duty Consultants) for issues relating to the amalgamation and if required appearing before the any of the above mentioned authorities.
53	Post merger/Any other case specific