Friday, December 30, 2011

Steps for merger and amalgamation :-

Once the merger partner has been identified and terms of merger are settled the procedure summarized in Appendix III can be followed. An explanation to the said steps is given below:

1) Scheme of amalgamation The scheme of amalgamation should be prepared by the companies, which have arrived at a consensus to merge. There is no specific form prescribed for scheme of amalgamation but scheme should generally contain the following information:
1. Particulars about transferee and transferor companies
2. Appointed date
3. Main terms of transfer of assets from transferor to transferee with power to execute on behalf or for transferee the deed or documents being given to transferee.
4. Main terms of transfer liabilities from transferor to transferee covering any conditions attached to loans/debentures/ bonds/other liabilities from bank /financial institution/ trustees and listing conditions attached thereto.
5. Effective date when the scheme will come into effect
6. Conditions as to carrying on the business activities by transferor between ‘appointed date’ and ‘effective date’.
7. Description of happenings and consequences of the scheme coming into effect on effective date.
8. Share capital of transferor company specifying authorized capital, issued capital and subscribed and paid up capital
9. Share capital of transferee company covering above heads.
10 Description of proposed share exchange ratio, any conditions attached thereto, any fractional share certificates to be issued, transferee company’s responsibility to obtain consent of concerned authorities for issue and allotment of shares and listing.
11 Surrender of shares by shareholder of transferor company for exchange into new share certificates.
12 Conditions about payment of dividend, ranking of equity shares, pro rata dividend declaration and distribution.
13 Status of employees of the transferor companies from effective date and the status of the provident fund, gratuity fund, super annuity fund or any special scheme or funds created or existing for the benefit of the employees.
14 Treatment on effective date of any debit balance of transferor company balance sheet.
15 Miscellaneous provisions covering income-tax dues, contingencies and other accounting entries deserving attention or treatment.
16. Commitment of transferor and transferee companies towards making applications/petitions under section 391 and 394 and other applicable provisions of the con Companies Act, 1956 to their respective High Courts.
17. Enhancement of borrowing limits of the transferee company upon the scheme coming into effect.
18. Transferor and transferee companies give assent to change in the scheme by the court or other authorities under the law and exercising the powers on behalf of the companies by their respective Boards.
19. Description of powers of delegatee of transferee to give effect to the scheme.
20. Qualification attached to the scheme, which require approval of different agencies, etc.
21. Description of revocation/cancellation of the scheme in the absence of approvals qualified in clause 20 above not granted by concerned authorities.
22. Statement to bear costs etc. in connection with the scheme by the transferee company.

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