The Ministry of Corporate Affairs (MCA) has introduced amendments to the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2016, which came into effect on May 15. These changes aim to expedite the approval process for mergers and acquisitions (M&As), allowing for quicker decision-making.

Under the new rules, M&As can now obtain approval within 15 days, with a maximum timeframe of 60 days. The MCA has named the revised regulations the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023.

In cases where no objections or suggestions are received from the Registrar of Companies (RoC) and the official liquidator within 30 days of receiving the scheme, the government can issue a confirmation order within 15 days, provided the scheme is deemed to be in the public interest or beneficial for creditors.

If objections or suggestions are received from the RoC and official liquidator, and those objections are found to be without merit, and the scheme is deemed to be in the public interest, the government can issue a confirmation order within 60 days.

However, if a merger or amalgamation is not in the public interest, the government can file an application with the tribunal for review.

If the government does not issue a confirmation order or file an application within 60 days, the merger or amalgamation scheme will be considered approved.

These new rules are expected to have a significant impact on the startup ecosystem, particularly as the sector faces macroeconomic challenges that may result in more M&A activity. Struggling startups with weak financial performance and difficulty raising funds may seek M&A deals as a means of survival during funding shortages.

In 2022, a total of 240 M&A deals took place, a 10% increase compared to 2021, according to Inc42’s ‘Annual Funding Report 2022’. Enterprisetech emerged as the sector with the highest M&A activity during the same period.

The revised regulations aim to streamline the approval process for M&As and foster a more efficient environment for corporate restructuring, benefitting both companies and the overall business landscape.

The Ministry of Corporate Affairs (MCA) has introduced amendments to the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2016, which came into effect on May 15. These changes aim to expedite the approval process for mergers and acquisitions (M&As), allowing for quicker decision-making.

Under the new rules, M&As can now obtain approval within 15 days, with a maximum timeframe of 60 days. The MCA has named the revised regulations the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023.

In cases where no objections or suggestions are received from the Registrar of Companies (RoC) and the official liquidator within 30 days of receiving the scheme, the government can issue a confirmation order within 15 days, provided the scheme is deemed to be in the public interest or beneficial for creditors.

If objections or suggestions are received from the RoC and official liquidator, and those objections are found to be without merit, and the scheme is deemed to be in the public interest, the government can issue a confirmation order within 60 days.

However, if a merger or amalgamation is not in the public interest, the government can file an application with the tribunal for review.

If the government does not issue a confirmation order or file an application within 60 days, the merger or amalgamation scheme will be considered approved.

These new rules are expected to have a significant impact on the startup ecosystem, particularly as the sector faces macroeconomic challenges that may result in more M&A activity. Struggling startups with weak financial performance and difficulty raising funds may seek M&A deals as a means of survival during funding shortages.

In 2022, a total of 240 M&A deals took place, a 10% increase compared to 2021, according to Inc42’s ‘Annual Funding Report 2022’. Enterprisetech emerged as the sector with the highest M&A activity during the same period.

The revised regulations aim to streamline the approval process for M&As and foster a more efficient environment for corporate restructuring, benefitting both companies and the overall business landscape.