AMENDMENT – NEW RULES – The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020

The Central Government has amended the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (hereinafter referred to as the "Principal Rules") by the insertion after Sub-Rule (4), of the following sub-rule:

“(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 the 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, the 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 the amount not Iess than one-half of the total consideration of the takeover offer is deposited.”.

3. In the principal rules, there is a change in the schedule of Fees which is as follows:

1Sub-section (1) of section 2303Application compromise arrangement amalgamationRs.5,000/

Further, the NCLT Rules got amended with new rules i.e. the National Company Law Tribunal (Amendment) Rules, 2020 with the insertion of the following to make the above said changes effective through the proper forum.

In the National Company Law Tribunal Rules, 2016 (hereinafter referred to as the principal rules), after rule 80, the following rule shall be inserted, namely:-

“80A. The application under section 230. – An application under sub_ section (12) of section 230 may be made in Form NCLT-1 and shall be – accompanied with such documents as are mentioned in Annexure B.”.

SCHEDULE OF FEES, after S.No.22 and the entries relating thereto, the following shall be inserted, namely:-

22ASec 230(12)Application in cases of takeover offer of companies which are not listed Rs. 5,000

 “Annexure-B”, after S.No.12 and the entries relating thereto, the following S.No. shall be inserted, namely:-

12ASec 230(12)Application in cases of takeover offer of companies which are not listed. Affidavit verifying the petition2. Memorandum of appearance with a copy of the Board’s Resolution or the executed vakaltnama, as the case may be.

3. Documents in support of the grievance against the takeover.

4. Any other relevant document.