Provisions of The Companies Act On Restructuring and Merger
According to Section 392 (1) where the High Court makes an order under Section 391 it shall have the power to supervise the implementation of the scheme and may make necessary directions for implementation or modification as it finds necessary.
Under Section 392 (2) if the Court finds that the scheme cannot be worked satisfactorily with or without modifications, it may order for winding up of the company.
According to Section 393 (1) where a meeting of creditors or members or any class of them has been called under Section 391, with every notice convening meeting a statement shall be attached containing the terms of compromise or arrangement or its effect; and the material interests in it of the directors or managers of the company in any capacity and the special effect of such interest, if any, and when notice is given by advertisement then either it shall contain the aforesaid statement or an intimation as to where and how a creditor or member entitled to attend the meeting can get a copy of the aforesaid statement.
Under Section 393 (2) where the compromise or arrangement is concerning the debenture holders the statement of interests in it of the trustees of the debenture holders, if any, shall be likewise attached to the notice.
Under Section 393 (3) where it is given in the advertisement that a member or creditor can get a copy of the statement, the company shall provide it free of charge.
According to Section 394A the Court shall give notice to the Central Government on receiving an application under Section 391 and shall consider the representations by that Government before making an order.
Provisions for reconstruction or amalgamation
According to Section 394 (1) on an application to the Court under Section 391 of the said Act for a scheme of reconstruction or amalgamation of companies, by virtue of Section 394 of the said Act the Court may while sanctioning the scheme or thereafter provide for the following matters:-
transfer to the transferee company the whole or part of the undertaking, assets or liabilities of any transferor company
the allotment of shares, debentures, policies or like interests by the transferee company to any person
the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company
the dissolution without winding up of any transferor company
the provision for any person dissenting from the scheme, within the specified time in the specified manner
any such incidental matters necessary for carrying out the reconstruction or amalgamation
However the Court shall not sanction the amalgamation of a company, which is being wound up, with another company unless the Court has received a report from the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interests of the company or to public interest. No order for dissolution without winding up of any transferor company shall be made by the Court unless the official liquidator after scrutiny of its books makes a report to the Court that its affairs have not been conducted in a manner prejudicial to public interest or against the company’s own interests.
Under Section 394 (2) by the order of the Court any charged property of the transferor company transferred to the transferee company shall be freed from such charge at the discretion of the Court.
Under Section 394 (3) within 30 days of making the order the order every company shall file a certified copy of the order with the Registrar of Companies.
According to Section 394A of the said Act the Court shall give notice to the Central Government on receiving an application for reconstruction or amalgamation under Section 394 and shall consider the representations of the Central Government before making an order on such application.
