Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020

Ministry of Corporate Affairs notifies the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020 to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

In rule 3, after sub-rule (4), the following sub-rules shall be inserted, namely: –

“(5) A member of the company shall make an application for arrangement, for the purpose of takeover offer in terms of sub-section (11) of section 230, when such member along with any other member holds not less than three-fourths of the shares in the company, and such application has been filed for acquiring any part of the remaining shares of the company.

Explanation I. – “shares” means the equity shares of the company carrying voting rights, and includes any securities, such as depository receipts, which entitles the holder thereof to exercise voting rights.

Explanation II.-Nothing in this sub-rule shall apply to any transfer or transmission of shares through a contract, arrangement or succession, as the case may be, or any transfer made in pursuance of any statutory or regulatory requirement.

(6) An application of arrangement for takeover offer shall contain:

(a) the report of a registered valuer disclosing the details of the valuation of the shares proposed to be acquired by the member after taking into account the following factors: –

(i) the highest price paid by any person or group of persons for the acquisition of shares during last twelve months;

(ii) the fair price of shares of the company to be determined by the registered valuer after taking into account valuation parameters including return on net worth, book value of shares, earning per share, price earning multiple vis-d-vis the industry average, and such other parameters as are customary for valuation of shares of such companies.

(b) details of a bank account, to be opened separately, by the member wherein a sum of amount not Iess than one-half of total consideration of the takeover offer is deposited.”

*For the detailed notification, please follow the link: Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020


Ministry of Corporate Affairs

[Notification dt. 03-02-2020]

One comment

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    Hi,

    Can you please give brief analysis of this amendment.

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