Companies Act Section 237 — Power of Central Government to provide for amalgamation of companies in public interest
CHAPTER XV COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS
Commercial / Corporate
Summary
Sub-section (1) allows the Central Government to order the amalgamation of two or more companies into a single company if it is satisfied that this is essential in the public interest. The order must be notified in the Official Gazette, and it will specify the constitution, property, powers, rights, interests, authorities, privileges, liabilities, duties, and obligations of the new single company.
Sub-section (2) allows the order to include provisions for any legal proceedings that were pending by or against any of the original companies to be continued by or against the new transferee company. It also allows for any other consequential, incidental, or supplemental provisions that the Central Government considers necessary to give effect to the amalgamation.
Sub-section (3) states that every member or creditor, including a debenture holder, of each of the original transferor companies before the amalgamation will have, as nearly as possible, the same interest in or rights against the new transferee company as they had in their original company. If their interest or rights in the new company are less than what they had in the original company, they are entitled to compensation for that difference. This compensation will be assessed by an authority as prescribed, the assessment will be published in the Official Gazette, and the compensation will be paid to the member or creditor by the transferee company.
Sub-section (4) allows any person who is aggrieved by the assessment of compensation made by the prescribed authority to appeal to the Tribunal within thirty days from the date the assessment is published in the Official Gazette. After such an appeal, the Tribunal will make the assessment of compensation.
Sub-section (5) sets out conditions that must be met before an order can be made under this section. Under clause (a), a copy of the proposed order must be sent in draft to each of the companies concerned. Under clause (b), the time for preferring an appeal under sub-section (4) must have expired, or if an appeal has been preferred, it must have been finally disposed of. Under clause (c), the Central Government must have considered and made any modifications to the draft order that it deems fit in light of suggestions and objections received from any such company, any class of shareholders, or any creditors or class of creditors, within a period fixed by the Central Government that is not less than two months from the date the copy is received by that company.
Sub-section (6) requires that copies of every order made under this section be laid before each House of Parliament as soon as possible after the order is made.
Official Text
(1) Where the Central Government is satisfied that it is essential in the public interest that two or more companies should amalgamate, the Central Government may, by order notified in the Official Gazette, provide for the amalgamation of those companies into a single company with such constitution, with such property, powers, rights, interests, authorities and privileges, and with such liabilities, duties and obligations, as may be specified in the order.
(2) The order under sub-section (1) may also provide for the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company and such consequential, incidental and supplemental provisions as may, in the opinion of the Central Government, be necessary to give effect to the amalgamation.
(3) Every member or creditor, including a debenture holder, of each of the transferor companies before the amalgamation shall have, as nearly as may be, the same interest in or rights against the transferee company as he had in the company of which he was originally a member or creditor, and in case the interest or rights of such member or creditor in or against the transferee company are less than his interest in or rights against the original company, he shall be entitled to compensation to that extent, which shall be assessed by such authority as may be prescribed and every such assessment shall be published in the Official Gazette, and the compensation so assessed shall be paid to the member or creditor concerned by the transferee company.
(4) Any person aggrieved by any assessment of compensation made by the prescribed authority under sub-section (3) may, within a period of thirty days from the date of publication of such assessment in the Official Gazette, prefer an appeal to the Tribunal and thereupon the assessment of the compensation shall be made by the Tribunal.
(5) No order shall be made under this section unless—
(a) a copy of the proposed order has been sent in draft to each of the companies concerned;
(b) the time for preferring an appeal under sub-section (4) has expired, or where any such appeal has been preferred, the appeal has been finally disposed off; and
(c) the Central Government has considered, and made such modifications, if any, in the draft order as it may deem fit in the light of suggestions and objections which may be received by it from any such company within such period as the Central Government may fix in that behalf, not being less than two months from the date on which the copy aforesaid is received by that company, or from any class of shareholders therein, or from any creditors or any class of creditors thereof.
(6) The copies of every order made under this section shall, as soon as may be after it has been made, be laid before each House of Parliament.