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Published by Enhelion, 2019-11-17 07:28:54

MODULE_2

MODULE_2

MERGERS &
ACQUISITIONS

CERTIFICATE COURSE

DEVELOPED BY
Corp Comm Legal

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MODULE - 2

SERIES OF STEPS INVOLVED IN
MERGERS & ACQUISITIONS

2.1 INTRODUCTION

Mergers and acquisitions have witnessed substantial of the Indian economy. In addition, the proposal to
surges and downfalls in India. In 2014, Indian companies abolish the Foreign Investment Promotion Board in the
were involved in transactions worth $ 33 billion whereas Union Budget FY17-18 has further liberalized the FDI
in 2015, the value of M&A activity saw a drop of $ 20 policy and encouraged foreign investors.
billion. In 2015, the Indian M&A landscape was
dominated by inbound deals with interest coming from The term ‘merger’ was not defined under the Companies
US, German and Canadian biddersi. But in 2016, it Act, 1956 (“CA 1956”) or, under Income Tax Act, 1961
touched a six-year high, sky rocketing deal values (“ITA”). However, the Companies Act, 2013 (“CA 2013”)
clocking $56.2 billion, the highest since 2010. The robust explains the concept. A ‘merger’ is a combination of two
M&A momentum is expected to continue through 2018, or more entities into one; the desired effect being not
owing to continued positive macroeconomic outlook for just the accumulation of assets and liabilities of the
the country, a sustained focus on reforms by the distinct entities, but organization of such entity into one
Government amid optimistic investor sentiment. business.

As scale expansion has become a critical element of In the case of acquisition, an 'acquisition' or 'takeover' is
Indian corporate strategy agenda, consolidation is most the purchase by one entity, of controlling iiinterest for
likely to dominate the M&A agenda across sectors. On the share capital, or all or considerably the greater part
the inbound-front, investments are more likely to stay of the advantages and additionally liabilities, of the
healthy considering the attractiveness objective. A takeover might be invited or unfriendly, and
might be affected through

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agreements between the offeror and the greater part of The draft copy of merger proposal is required to be
shareholders, buy off offers from the open market, or by approved by the respective Board of Directors. The
making an offer for acquisition of the objective's offers board of each company is required to pass a
to the whole assortment of shareholders. Acquisitions resolution authorizing its directors/executives to
might be by method for acquisition of offers of the pursue the matter further.
objective, or acquisition of advantages and liabilities of 4. Application to National Company Law Tribunal
the objective. (NCLT)-
Company should make an application to the
2.1.1. Legal Procedure for Bringing About Merger of respective NCLT bench where its registered office is
Companies situated once the drafts of merger proposal are
approved by the respective boards for the purpose
1. Examination of object clause of the merging of convening the meetings of shareholders and
company- creditors for passing the merger proposal.
The Memorandum Of Association (MOA) of both the 5. Dispatch of notice to shareholders and creditors-
companies should be examined to check if the power After approval from the respective NCLT benches, for
to amalgamate is available. Also, the object clause of the purpose of convening the meetings of
the merging company should be looked into to check shareholders and creditors, a notice and an
whether it permits the merging company to carry on explanatory statement of the meeting is required to
the business of the merged company. In absence of be dispatched by each company to its shareholders
such clause, necessary approvals of the and creditors as a 21 days prior intimation and it
shareholders, board of directors, among others, should also be published in two newspapers.
need to be secured. 6. Holding of meetings of shareholders and creditors-
For the purpose of passing the scheme of mergers, a
2. Intimation to stock exchanges- meeting of shareholders is required to be held by
The stock exchanges should be informed about the each company and minimum 75% shareholders
merger proposal where merging and / or merged (present in person or by proxy) must approve of such
companies are listed. Regularly, copies of all notices, scheme. Same applies to creditors as well.
resolutions, and orders should be mailed to those 7. Petition to NCLT for confirmation and passing of
stock exchanges. NCLT orders-

3. Approval of the draft proposal by respective boards-

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As soon as the scheme of merger is passed by the seller covenanting the same to the buyer. This provides
shareholders and creditors, the companies should the buyer with an exit option in case of non-fulfilment of
present a petition with NCLT for confirming the the said conditions or at the very least leverage for
scheme. A notice about the same has to be published renegotiation of the terms of acquisition
in 2 newspapers as well.
8. Filing the order with the Registrar of Companies Condition precedent constitutes an essential component
(ROC)- of an agreement from the buyer’s perspective in so far as
Certified true copies of the NCLT order have to be it protects the interests of the buyer by putting certain
filed with the ROC within the specified time limit. conditions on the seller. Condition precedents vary from
9. Transfer of assets and liabilities- transaction to transaction depending on the facts and
After the final orders have been passed by the NCLT, circumstances of each case.
all the assets and liabilities of the merged company
is required to be transferred to the merging The most essential condition precedent is to provide
company. clear and marketable title to the assets/shares of the
10. Issue of shares and debentures- target company.
After all the formalities are met, the merging
company should issue shares and debentures of the Ø Foreign investment permissions- it is a determining
merging company. The new shares and debentures factor in structuring any transaction under the Indian
issued will then be listed on the stock exchange. regulatory regime. In terms of foreign investment,
permission of the RBI and/or the administrative
Acquisition agreements provide that the representations ministry may be required for investment in several
and warranties of the parties must be true and correct at sectors including insurance, banking,
the closing, and that the pre-closing covenants have telecommunication, airlines, etc. given that India has
been performed prior to the closing. This may be not permitted a full capital account convertibility and
confirmed by delivering a written certificate to that maintains sectoral restrictions on foreign
effect to one party to another. investment. In the case of a company in the financial
sector, transfer from a resident to a non-resident
It is common practice to include the below mentioned also requires prior permissioniii.
provisions as condition precedent in addition to the

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Ø Regulatory approvals- In addition to the permission Ø No Objection Certificates- Lenders and secured
of RBI and/or an administrative ministry, permissions creditors may commonly stipulate conditions in the
from various other ministries, government loan agreements that require prior consent of such
departments and local authorities also become an lenders to be obtained in case of any change in
important factor. For instance, mergers and control and/or transfer of substantial assets of the
amalgamations of financial sector companies like debtor company. This is to ensure that no change
banks, non-banking financial companies, etc., detrimental to their interests and security occurs
require the prior permission of RBI as their sectoral without their knowledge and consent.
regulator. Further, it is recommended to obtain a
certificate under Section 281 of the Income Tax Act Ø Due Diligence Results- Prior to any merger or
confirming that there are no dues pending. acquisition, the buyer may carry out a due diligence
review (which could be financial, accounting,
Ø Corporate authorization-The Act permits the board secretarial, operational, legal and so on) and any
of directors to take decisions for and on behalf of the adverse finding found in the course of such due
company except those which specifically require diligence process is preferably removed/rectified
prior authorization by the shareholders of the prior to the closing of the transaction.
company. Certain shareholder approvals may be
required.

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2.2 BUYERS VIEWPOINTS IN M&A

In documents and contracts and agreements, you usually 2. Financial Buyers-Financial Buyers are funds of
see Buyer as a defined term, which means it’s money that buy companies. Financial Buyers of
capitalized. middle market and lower middle market companies
are typically private equity (PE) funds.
“Buyer” isn’t a one-size-fits-all category. A Buyer may Other companies that are backed by PE funds: The
acquire all or part of a company, the stock of the Company will be the new owner of the acquired
company, or certain or all assets and even assume some company, but another entity (the fund) is providing
of the liabilitiesiv. Buyers typically fall into four broad the aid to do the deal.
typesv:
3. Individuals-Although it happens, an individual buying
1. Strategic Buyer- These Buyers are other companies a middle market or lower middle market company is
planning to combine operations of the two rare. Individuals usually buy small retail shops,
companies to some extent (as opposed to buying consulting firms, or construction companies.
strictly for financial reasons). For example, when Stereotypically, these companies have revenues of
Oracle buys a company, Oracle is considered a less than $1 million.
strategic Buyer because it buys companies that have
some kind of synergy to its business.

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2.3 SELLERS IN THE M&A WORLD

Ø Spin off-Spinoff is the process of creating an Ø To avoid potential double taxation as taxation
independent company by way of sale or distribution implications exist only at the shareholder level on
of new shares of an already existing business or the sale of the shares;
division of a parent company.
Ø To make sure that there is no clawback of tax
Ø Taking chips off the table-Any circumstance wherein depreciation because the tax depreciable assets stay
the shareholders desire to sell some or all of their within the company which claimed the capital
shares without any disturbance to the business allowances;
particularly when the company is neither
restructuring nor refinancing. However, an owner Ø To ensure that the position relating to contractual
may want to take some chips off the table without arrangements and consent/notification
giving up its control on the company. This situation is requirements to third parties is straightforward;
called a recapitalization, or recap.
Ø To ensure that the potential claims and liabilities of
Ø The growth capital-The Seller may issue more stock the target company pass to the purchaser on
for raising capital for the purpose of investment in acquisition, along with all duties, obligations and
the business. In such circumstance, the owner liabilities under contracts entered into by the target
actually isn’t selling the company but rather selling company;
more stakes in the company. The money from the
sale does not go to the owner but rather the Ø To avoid the need to wind up the target company in
company retains the money to fund growth in the case an asset sale occurs;
company.

A seller seeks to structure the transaction as a sale of
shares due to the following reasons:

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2.4 SHARES IN A MERGER

When a merger or acquisition is conducted, there are acquiring company, simultaneously, obtains all the
various ways for payment of the assets received by the assets and liabilities of the target firm, thus neutralizing
acquiring company. There can be outright cash payment the effects of the dilution. If the merger proves beneficial
for all the equity shares of the target company, paying and provide sufficient synergy, the current shareholders
each shareholder a specified amount for each share or, will gain from the additional appreciation provided by
the company’s shares can be given to the target the assets of the target company in the long run.vi
company's shareholders according to a
specified conversion ratio (i.e. for each share of the A merger of equals, theoretically, is where two
target company, the shareholder shall receive X number companies convert their respective stocks to those of the
of shares of the acquiring company). Acquisitions can be new, combined company. In practice, two companies
made partly with cash and partly with stock, or with generally make an agreement for one company to buy
all stock compensation the other company's shareholding from the
shareholders in exchange for its own shares. In some
In case of such a merger, the acquiring company cases, cash or other form of payment is used to facilitate
proposes to the target firm a certain number of its equity the equity transaction. Usually the most common
shares in exchange for the target company's shares. arrangements are for share exchange.
When the target company accepts the offer (which
includes a specified conversion ratio), the acquiring Mergers don't occur on a one-to-one basis mostly due to
company may issue certificates to the target firm's different inherent value of the merging companies.
shareholders, allowing them to trade in their current Much like a split, the amount of the new company's
shares for rights to acquire a pro rata number of the shares received in exchange for one’s stake in Company
acquiring firm's shares. A is represented by a ratio. The real number might be one
for 2.25, where one share of the new company will cost
This action leads to the dilution of the 2.25 shares of Company A.
current shareholders' equity, as there are more total
shares outstanding for the same company. However, the

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Fractional shares are dealt in one of two ways: the
fraction is cashed out automatically and one can get a
check for the market value of the fraction, or the number
of shares can be rounded downvii.

2.5 ACQUISITIONS AND VALUE DIVISION

Acquisitions can either be the price at which the acquiring entity receives the
shares required to gain control of the target entity.
Ø Friendly or
Ø Hostile event. The breakdown of the acquisition price into different
component parts.viii
In case of a friendly acquisition, the managers of the As a shareholder in an acquiring entity, a person will
target firm welcome the acquisition and, in some cases, ultimately gain or lose on an acquisition based not upon
seek for it. However, in a hostile acquisition, the target
entity’s management does not want to be acquired.

In the process, the entity proposing to acquire offers a
higher price than the target entity’s market price before
the acquisition and invites shareholders in that entity to
tender their shares for that price. In both friendly and
hostile acquisitions, the difference between the
acquisition price and the market price before the
acquisition is called the acquisition premium. With
reference to mergers, the acquisition price is the price
that will be paid by the acquiring entity for each share of
the target entity. Usually negotiations between the
managers of both the entities determine this price. It is

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whether the acquisition creates value or not, but upon value of Rs.200 crore and it believes that it can generate
how much is paid for the acquired entity. Rs.50 crore in value from synergy. If company A can
acquire company B for less than Rs.250 crore, the
If a company invests Rs.1,000 crore in a project and gets shareholders of both companies will gain from the
back only Rs.900 crore in value from the investment, its acquisition. If the acquisition price is Rs.250 crore, the
value will decrease by Rs.100 crore. If a company shareholders of company A will neither gain nor lose and
acquires another company and pays more than the company B’s shareholders will gain the entire value of
amount it will get back in cash flows (inclusive of synergy, the synergy. If company A pays more than Rs.250 crore
control and other benefits listed in the last section), its for company B, the share price in company A will drop by
value shall drop by the amount of the overpayment. the amount of the overpayment and company B’s
shareholders will gain proportionately.
Consider an example: Company A, with a market value of
Rs.300 crore, decides to buy company B with a market

2.6 THE MOST ACQUISITIVE FIRMS IN THE
CORPORATE ENVIRONMENT

Ø Throwing light upon the most acquisitive firms in the of the most acquisitive group because its various
corporate environment of India, AV Birla group group entities are active in M&A. The group
stands first in line. AV Birla group is considered to be comprises of 91 companies. Among them Tata Steel
one of the most active groups in M&A. It has made is the most active which has made 14 deals. The
17 deals worth $8.1 billion over the last 5 years.ix other active companies include Tata Consultancy
Services (6 deals), Tata Communications (9 deals),
Ø The Tatas have done 72 M&A deals (both domestic Tata Chemicals, Tata Motors, the group holding firm
and cross border) worth $22 billion (announced deal Tata Sons, Tata Global Beverages and Tata Coffee.
value) since 2005. Ø Mahindra Group which has done 28 deals,
announced deal value of $2.1 billion. Mahindra has
Ø Tata Steel’s 2006 acquisition of UK’s Corus for $12.1
billion was the biggest. Tata house gets the honour

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also done a wide range of deals ranging from is, stake purchases in Indian start-ups or Indian-owned
SsangYong Motor Company of South Korea to foreign assets by overseas entities. Indian companies
electric car maker Reva, the troubled Satyam made investments internationally in a total of 37
Computer Services, two-wheeler maker Kinetic outbound deals.
Motor Company, and an aircraft manufacturer
Gippsland Aeronautics of Australia. Collaborations are more adaptable than M&As, as it can
Ø The Essar group too is quite aggressive in this game. empower organizations to get to particular aptitudes. Be
They have also done 22 deals worth a total deal value that as it may, associations require an expansive key
of more than $7 billion. It includes the acquisition of arsenal and must be sufficiently capable to utilize the
BPL Communications, Warid Congo, Canadian steel correct exchange for any circumstance.
company Algoma and Trinity Coal.
Ø In terms of mid-sized deals, Wipro bags the highest As of late, there has been fast development in joint effort
rank. They have done 21 deals worth $1.3 billion. as a contrasting option to mergers and acquisitions. The
Wipro’s acquisitions cover a wide range from IT development has not quite recently been in esteem, but
companies to FMCG firms. The other groups that are rather in the regularly enlarging scope of arrangements
getting aggressive on the M&A front include Dabur accessible.
Group which has done 9 deals worth $500 million
and Future Group which has done 10 deals. Collaborations through a consortium or joint venture are
entrenched methods for sharing high expenses and
India Inc. is definitely mastering the M&A game. overseeing hazard, for example, in the oil and
development ventures. This hazard sharing would not be
Indian Start-ups have also showed a vast rise in M&A conceivable through sole proprietorship. Joint effort is
activity in the past 5 years. According to stats provided likewise suitable where the extension is normally
by VCCedge.com, a financial research platform for constrained, for example, a particular contract or patent.
private markets, there were a total of 224 mergers and The collaboration can serve its term and after that reach
acquisitions from January 2015 to December, worth its characteristic decision, a result that is not effortlessly
$2139.41 million (roughly Rs. 14,280 crores), out of accessible through possession. Coordinated effort is
which, the values for only 40 were disclosed. Out of likewise utilized widely by western organizations to enter
these, 157 were domestic, while 30 were inbound, that quickly developing markets, for example, China, India

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and Japan. Western items are alluring to purchasers, the terms are intrinsically more adaptable. Conversely,
however the neighbourhood accomplices have the mergers dispose of
contacts, showcase learning and social aptitudes to
advertise them, and also nearby assembling offices. duplication and make a solitary administration group. At
the same time, they bring about challenges related with
Joint effort includes low to medium hierarchical reliance, social fit, income slippage, item and innovation
has clear objectives on the two sides and a decent vital legitimization and power battles.
fit. Although the level of responsibility may be different,
Collaboration gives a chance to the gatherings to
cooperate and can in the long run prompt obtaining.

2.7 CARRYING OUT A MERGER IN INDIA

India is a popular target for foreign investors seeking The process of screening and selecting companies for
acquisition. However, inbound acquisitions in India can mergers should be carried out in a systematic manner i.e.
be complicated. Historically, Indian economy was strictly from general to specific. The process commences by
guarded, planned and blocked for outside investment identifying the general domains of potential industries to
but today, the acquisition of Indian companies by foreign selection of companies to be evaluated and approached
investors has become possible due to economic for mergers. The process generally followed is detailed
liberalisation and continuous policy reforms. out belowx:

In today's corporate world, mergers and acquisitions Ø Identifying Industries-First a set of industries is
have gained significant importance. This process is selected that meet the strategic conditions outlined
extensively used for streamlining the business by the company for mergers. This may be in terms of
organizations. By adopting the mergers and acquisitions size of the company.
policies, financial organizations were able to take the
necessary steps to reform the corporate sector of India. Ø Selecting Sectors- A group of acceptable selectors is
then identified. For each sector data with respect to
2.7.1. Preliminary Steps in Mergers sales, return on investment, turnover and growth,

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market shares, competition and asset turnover etc. (ii) Large sales Volume
is collected for various companies and the most
desirable sector is chosen. (iii) Good Management System

Ø Choosing Companies- Potential companies are (iv) Good distribution channel
carefully analysed with respect to competitive
environment in which they operate with specific (v) Diverse Portfolio or its potential
attention to competitive strengths of these
companies in their sectoral environment. (vi) A return of investment above benchmark
Comparable sizes increase the chances of success of
merger. Ø Assessing the Suitability- The suitability is to be
judged against three criteria i.e. business,
Generally, sales turnover and the asset level, which management fit and financial strength. Once a
in turn determine the cost level of acquisition, are proposal fits into these criteria then all relevant
used to measure the size of companies. information is collected related to the company.
Thereafter, a SWOT Analysis is conducted for both
Ø Comparative Cost and Returns-here the financial the companies. If suitability is found after such an
obligations associated with mergers and acquisitions analysis, then the merger may be considered.
are considered. The companies are listed and
compared with respect to their return on investment Ø Appropriateness of Timing- The companies have to
and future expected returns can also be developed ensure that they merge in the right time till the time
on the basis of their market scenario. they can afford to carry out all the processes
properly.
Ø Short Listing Good Companies- Generally a merger
with other company can be considered, if it will lead Ø Negotiation Stage- A valuation is conducted after the
to an increase the overall economic value of the consideration is decided with the help of which the
company. To achieve this, it is necessary to identify payment terms and / or exchange ratio of shares
the companies, which have one or more of the between the companies will be decided.
following:
Ø Approval of Board of Directors- Once the
(i) High market share consideration of Deal and Terms of Payment are
worked out, the proposal is forwarded for the
approval of Board of Directors.

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Ø Approval of Shareholders-Under the directions of their interest is considered in drawing up the merger
NCLT, the shareholders of both the companies hold scheme.
a meeting to consider the merger scheme.
The regulators shall examine the request keeping in mind
Ø Approval of Creditors/ Financial Institutions/ Banks- the statutory, regulatory and other prudential
Approval from constituents for scheme of mergers requirements and the need for compliance with various
are required to be obtained as per the respective statutory provisions and may approve the same with or
agreement/ arrangement with each of them and without conditions.

2.8 APPROVALS REQUIRED TO BE OBTAINED
IN MERGERS & ACQUISITIONS

Ø Approval of Board of Directors Ø Shareholders/ Creditors form a significant part of the
company and their approval is thus necessary for
Ø The board shall appoint a Director or a Company amalgamation. Without such an approval the NCLT
Secretary or any other officer who shall carry out cannot proceed with the amalgamation proceedings.
necessary documentation for the scheme.
Ø The shareholders give their approval at special
Ø Approval of the Share Holders/ Creditors meetings which are held as per NCLT directions

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2.9 STEPS INVOLVED IN PROCEDURE OF
MERGERS

An application for Merger & Amalgamation can be filed d) A disclosure in form of affidavit including following
with NCLT. Both the transferor and the transferee points:
company shall submit an application in the form of
petition to the NCLT under section 230-232 of the All material facts relating to the company, such as
Companies Act, 2013 for the purpose of sanctioning the
amalgamation scheme. i. The latest financial position of the company,

A joint application may be filed on the discretion of the ii. The latest auditor’s report on the accounts of
companies. But when two different tribunal have the company and
jurisdiction if the registered office of the companies is in
two different states, two separate petitions will have to iii. The pendency of any investigation or
be filed. proceedings against the company

A draft scheme of the Merger or Amalgamation shall be – Reduction of share capital of the company, if
prepared and presented in the board meetings of both any, included in the compromise
the companies to be approved by its members.
or arrangement.
1. Format of Application-
e) Any scheme of Corporate Debt
Application to the tribunal for Merger & Amalgamation Restructuring consented to by not less than seventy-five
will be submitted in form no. NCLT-1 along with per cent of the secured creditors in value, including
following documents:
i. A Creditor’s Responsibility statement in the
a) A notice of admission in Form No. NCLT-2 form No. CAA-1.

b) An affidavit in form no. NCLT-6 ii. Safeguards for the protection of other secured
and unsecured creditors.
c) A copy of Scheme of C&A (Merger &Amalgamation)
iii. Report by the auditor that the fund
requirements of the company shall conform to the

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liquidity test based upon the estimates provided to them ii. Appointing a Chairperson and scrutinizer for
by the Board the meeting or meetings to be held, as the case may be
and fixing the terms of his appointment including
iv. Where the company proposes to adopt the
corporate debt restructuring guidelines specified by the remuneration.
Reserve Bank of India, a statement to that effect
iii. Fixing the quorum and the procedure to be
and followed at the meeting or meetings, including voting in
person or by proxy or by postal ballot or by voting
v. A valuation report in respect of the shares and
the property and all assets, tangible and intangible, through electronic means.
movable and immovable, of the company by a registered
valuer. iv. Determining the values of the creditors or the
members, or the creditors or members of any class, as
f) The applicant shall also disclose to the Tribunal in the the case may be, whose meetings have to be held.
application, the basis on which each class of members
has been identified for the purposes of approval of the v. Notice to be given of the meeting or meetings
scheme. and the advertisement of such notice.

2. Calling of Meeting by NCLT- vi. Notice to be given to sectoral regulators or
authorities as required under sub-section (5) of section
Upon hearing of the application NCLT shall, unless it 230
thinks fit for any reason to dismiss the application, give
such directions / order as it may think necessary in vii. The time within which the chairperson of the
respect meeting of the creditors or class of creditors, or meeting is required to report the result of the meeting to
of the members or class of members, as the case may be, the Tribunal and
to be called, held and conducted in such manner as
prescribed in rule 5 of Compromises, Arrangements, ad viii. Such other matters as NCLT may deem
Amalgamations (CAA) Rules, 2016 as follow: necessary.

i. Fixing the time and place of the meeting or 3. Notice of Meeting-
meetings.
The Notice of the meeting pursuant to the order of
tribunal is to be given in Form No. CAA-2.

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The notice shall be sent individually to each of the Ø Corporate Identification Number (CIN) or
Creditors or Members and the debenture-holders at the Global Location Number (GLN) of the
address registered with the company. (Section 230(3)) company

4. Other requirements- Ø Permanent Account Number (PAN)
a) Person authorized to send the notice- Ø Name of the company
Ø Date of incorporation
Ø Chairman of the Company, or Ø Type of the company (whether public or
Ø If tribunal so direct- by the Company or its
private or one person company)
liquidator or by any other person. Ø Registered office address and e-mail address
Ø Summary of main object as per the
b) Modes of Sending of notice-
memorandum of association; and main
Ø By Registered post, or by Speed post, or by business carried on by the company
courier, or Ø Details of change of name, registered office
and objects of the company during the last
Ø By e-mail, or by hand delivery, or by any five years
other mode as directed by the tribunal. Ø Name of the stock exchange (s) where
securities of the company are listed, if
c) Documents to be send along with notice- applicable
Ø Details of the capital structure of the
The notice of meeting along with a company including authorized, issued,
subscribed and paid up share capital and
Ø Copy of Scheme of C&A and Ø Names of the promoters and directors along
with their addresses.
Ø Following below mentioned details
of C&A if not included in the said scheme: (3) Relationship in case of Combined Application: if the
scheme of compromise or arrangement relates to
(1) Details of the order of the Tribunal directing the
more than one company, then the fact and details of any
calling, convening and conducting of the meeting: relationship subsisting between such companies who are

Ø Date of the Order
Ø Date, time and venue of the meeting.

(2) Details of the company including:

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parties to such scheme of compromise or arrangement, available for inspection at the registered
including holding, subsidiary or of associate companies. office of the company.
Ø Details of capital or debt restructuring, if
(4) Disclosure about effect of M&A on material interests any.
of directors, Key Managerial Personnel (KMP) and Ø Rationale for the compromise or
debenture trustee. arrangement.
Ø Benefits of the compromise or arrangement
(5) Details of Board Meeting: as perceived by the Board of directors to the
company, members, creditors and others (as
Ø The date of the board meeting at which the applicable).
scheme was approved by the board of directors. Ø Amount due to unsecured creditors.

Ø The name of the directors who voted in favour of (7) Disclosure about the effect of the Merger &
the resolution. Amalgamation (C&A) on:

Ø The name of the directors who voted against the Ø Key Managerial Personnel
resolution and Ø Directors
Ø Promoters
Ø The name of the directors who did not vote or Ø Non-Promoter Members
participate on such resolution. Ø Depositors
Ø Creditors
(6) Explanatory Statement disclosing details of the Ø Debenture holders
scheme of compromise or arrangement including: Ø Deposit trustee and debenture trustee
Ø Employees of the company
Ø Parties involved in such compromise or Ø Shareholders of the Company
arrangement.

Ø Appointed date, effective date, share
exchange ratio (if applicable) and other
considerations, if any.

Ø Summary of valuation report (if applicable)
including basis of valuation and fairness
opinion of the registered valuer, if any, and
the declaration that the valuation report is

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(8) A report adopted by the directors of the merging Ø Latest audited financial statements of the
company including consolidated financial
companies explaining effect of compromise on each class statements;
of shareholders, key managerial personnel, promoters
and non-promoter shareholders laying out in particular Ø Copy of the order of Tribunal in pursuance of
the share exchange ratio, specifying any special valuation which the meeting is to be convened or has
difficulties. been dispensed with;

(9) Following below mentioned details: Ø Copy of the scheme of Merger &
Amalgamation (C&A);
Ø Investigation or proceedings, if any, pending
against the company under the Act. Ø Contracts or agreements material to the
Merger & Amalgamation (C&A);
Ø Details of approvals, sanctions or no-
objection(s), if any, from regulatory or any other Ø The certificate issued by Auditor of the
governmental authorities required, received or company to the effect that the accounting
pending for the proposed scheme of treatment, if any,
compromise or arrangement
Ø Proposed in the scheme of Merger &
Ø A statement to the effect that the persons to Amalgamation (C&A) is in conformity with
whom the notice is sent may vote in the meeting the Accounting Standards prescribed under
either in person or by proxies, or where Section 133 of the Companies Act, 2013; and
applicable, by voting through electronic means
Ø Such other information or documents as the
Ø A copy of the valuation report, if any. Board or Management believes necessary
and relevant for making decision for or
(10) Details of availability of documents: against the scheme;

Details of the availability of the following documents for (11) Other documents:
obtaining extract from or for making or obtaining copies
of or for inspection by the members and creditors, Where an order has been made by the Tribunal under
namely section 232(1), merging companies or the companies in
respect of which a division is proposed, shall also be
required to circulate the following:

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Ø The draft of the proposed terms of the scheme Ø Confirmation that a copy of the draft scheme has
drawn up and adopted by the directors of the been filed with the Registrar;
merging company;
Ø The report of the expert with regard to
valuation, if any.

i Inbound domestic deals dominate Mergers and Acquisitions; viChris Gallant, What is a stock-for-stock for merger and how
less funds going abroad than inflows in M&As: ASSOCHAM- does this corporate action affect existing shareholders?,
E&Y study, Business Standard.com, https://www.business- Investopedia.com,
standard.com/article/news-cm/inbound-domestic-deals- http://www.investopedia.com/ask/answers/06/stockforstock
dominate-mergers-and-acquisitions-less-funds-going-abroad- mergerdetails.asp#ixzz4tPYyMd7c
than-inflows-in-m-as-assocham-e-y-study- vii Id.
115032600614_1.html (last visited Nov. 11 2018). viiiMergers and Acquisitions: share acquisition transactions –

ii back to basics, Deloitte.com,

iii Overseas Direct Investment, Rbi.org, https://www2.deloitte.com/ie/en/pages/finance/articles/merger
https://www.rbi.org.in/scripts/FS_FAQs.aspx?Id=32&fn=5
(last visited Nov. 11, 2018). s-acquisitions-share-acquisition-transactions.html
iv Bill Snow, Mergers and Acquisitions 13 (John Wiley and ixThe Most Acquisitive Companies of 2017 So Far, Company
Sons, Inc) (2018).
vAkila Agarwal & Sourav Kanti De Biswas, Public Mergers Valuation Services, https://www.company-valuation-
and Acquisitions in India: Overview, Thomsonreuters.com,
https://uk.practicallaw.thomsonreuters.com/3-503- services.co.uk/acquisitive-companies-2017-far/
1108?transitionType=Default&contextData=(sc.Default)&first x The Process Of Mergers And Acquisitions Law Company
Page=true&bhcp=1
Business Partnership, UniAssignment.com,

https://www.uniassignment.com/essay-samples/law/the-

process-of-mergers-and-acquisitions-law-company-business-

partnership-essay.php

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