MCA issues Norms for filing Arrangement application specified under Companies (Compromises, Arrangements and Amalgamation) Amendment Rule, 2020

The Ministry of Corporate Affairs (MCA) issued a notification on February 3, 2020, introduced the Companies (Compromises, Arrangements, and Amalgamation) Amendment Rule, 2020 wherein the norms for filing the arrangement application is specified which will come into force when it will be published into the Official Gazette of India.

As per Companies (Compromises, Arrangements, and Amalgamation) Amendment Rule, 2020 a member of a company may make an application for the arrangement pertaining to the takeover offer must fulfil two conditions namely:

1. The member of a company must not possess less than ¾ of the total shares of the company;
2. The application is filed for the purpose of acquiring the remaining part of the shares of the company.

Further, the Companies (Compromises, Arrangements, and Amalgamation) Amendment Rule, 2020 also consists of the norms pertaining to the contents of the application. The application filed for the takeover of a company must contain:

1. The member filling an application must contain a report of a registered valuer which must disclose all the details of the valuation of the shares which the member strives to acquire. Further, the member must take into account the 2 factors namely the highest price paid for acquisition for twelve months and the fair price of shares of a company.
2. The application filed by a member must contain the details of the bank account which is to be opened separately by the members wherein the sum of the amount must not be less than half of the total consideration of the takeover offer of the deposit.