India’s Ministry of Corporate Affairs (MCA) issued a notification on December 7 (Notification) announcing that certain provisions of the Companies Act, 2013 (Act), which are currently not in effect, will come into force on December 15, 2016.
The key provisions that will be brought into force include the following:
Compromise, Arrangements, and Amalgamation
Certain provisions contained in Chapter XV of the Act will be brought into effect that deal with
- the powers of the National Company Law Tribunal (NCLT) (i) to call a meeting of members or creditors or any class of them in the case of a compromise, arrangement, or scheme for reconstruction; and (ii) to enforce a compromise or arrangement;
- conditions to be complied with in case of a scheme of merger or amalgamation;
- the purchase of minority shareholdings where 90% of the issued equity share capital of a company has been acquired; and
- the power of India’s central government to provide for amalgamation of companies in the public interest.
It is noteworthy that the provisions regarding merger or amalgamation of an Indian company with a foreign company, as well as the provisions with respect to a takeover offer under a compromise or arrangement, have not been notified.
In addition, certain provisions contained in Chapter XX of the Act have been notified. These provisions govern the winding up proceedings of a company by the NCLT and regulate the jurisdiction and powers of the NCLT; the appointment, powers, and obligations of the company liquidator; the circumstances in which a company may be wound up; and the persons who are eligible to file a petition before the NCLT for the winding up of a company.
It may be noted that provisions governing voluntary winding up of a company have not been brought into force by the Notification.
The MCA also notified the Companies (Transfer of Pending Proceedings) Rules, 2016 (Rules) and published the Companies (Removal of Difficulties) Fourth Order, 2016 (Order) on December 7. The Rules and the Order are aimed at assisting in the transition of proceedings with respect to company law matters pending before Indian district courts and high courts to the NCLT.