The Ministry of Corporate Affairs, via a notification dated 7 December 2016, notified a number of provisions of the Companies Act, 2013, dealing with amalgamation, compromise, arrangement, liquidation and winding up. Significant changes have been brought about to provisions concerning reduction of capital (section 66), short form merger provisions for certain companies (section 233) and purchase of minority shareholding (section 236). Some of the major changes are as follows.
Under section 66: (1) reduction of capital is not allowed if the company is in arrears in the repayment of any deposit accepted by it; (2) a statutory auditor’s certificate confirming that accounting treatment is in accordance with accounting standards is required to be filed with the National Company Law Tribunal.
Under section 233, the option to follow the short form of process is provided for merger between: (a) small companies; and/or (b) a holding company/wholly owned subsidiary company.
Under section 236, a separate mechanism for buyout of minority shareholding has been provided.
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