C OMPANIES ACT,2013 CA. Arun Saxena Saxena & Saxena Chartered Accountants 811, Ansal Bhawan 16, Kasturba Gandhi Marg, New Delhi – Mob.:

COMPROMISE, ARRANGEMENT AND AMALGAMATION

Compromise or arrangement (Section 230)  Jurisdiction  Compromise includes: * Company with credirors or * Company with members  Arrangement includes: * Consolidation or division of share capital of different classes. 3 SAXENA & SAXENA

F Application for meeting of creditors and shareholders: Following information shall be given: Details of company, financial position, auditors report. Details of investigation pending. Reduction of capital if any. Details of scheme of CDR ( if any). o Creditors responsibility statement. o Safeguard for other secured and unsecured creditors. o Report by auditor on availability of fund after approval of CDR proposal. o Report for compliances of CDR guidelines The valuation report of shares, property and assets. Compromise or arrangement (Section 230)

Calling of meeting:  Notice to all SH/ creditors.  to Central Government, Income Tax, RBI, SEBI, Registrar and Stock Exchanges, OL, Competition, commission of India wherever applicable.  Notice at Website and  by advertisement.  Notice shall include copy of scheme.  Effect of scheme on KMP, promotors creditors etc.  objections within 30 days except for CCI.  Objections to the scheme can be raised by  holders of the share not less than 10% or  holders of debts not less than 5%. SAXENA & SAXENA 5 Compromise or arrangement (Section 230)

 Resolution be passed by 3/4 th majority by share holders and creditors.  Meeting of creditors/ shareholders can be dispensed with if consent of 90% of creditors are obtained.  Auditors certificate compliance of accounting standard for the accounting and entries be passed to implement the scheme. SAXENA & SAXENA 6 Compromise or arrangement (Section 230)

 Submission of scheme to tribunal  Order by tribunal.  protection of creditors  abetment of BIFER proceedings.  Exit option to dissenting shareholders.  Filing of order of Tribunal with ROC. SAXENA & SAXENA 7 Compromise or arrangement (Section 230)

Merger & Amalgamation (Section 233)  For the creditors meeting following shall also be circulated  Draft of proposed terms of scheme as approved by Directors  Confirmation of filing of draft scheme with ROC.  Report on effect of merger on shareholders, KMP, promoters  Share exchange ratio  Report on valuation  If audited accounts are older than 6 months before the first meeting of shareholders then supplementary account statement will also be enclosed. SAXENA & SAXENA 8

Merger & Amalgamation (Section 233)  If merger of the listed company with unlisted company then merged company shall remain unlisted.  The statement duly certified by CA, CS, Accountant, that scheme is being complied with as per order will be filed every year till the implementation.  Order may include:  transfer of sheres  dissolution of transeror company.  transfer of employees.  payment to shareholders not participating in scheme.  liability of officers of transferor company. SAXENA & SAXENA 9

Merger & Amalgamation (Section 233)  Setting off the Fee on authorised. Copy of order to ROC Penalty:  Company: Rs 1 to 5 lakh  Officer: Rs 1to 3 lakh  Imp.: Upto 1 year

FAST TRACK MERGER / ACQUISITION f) Fast Track merger and amalgamation for certain companies: This clause is applicable for merger/amalgamation of: i) Holding and wholly owned subsidiary companies. ii) Small companies iii) Any other company as may be prescribed. 1) Eligibility : 90% of each class of shareholders and the creditors and 2) Solvency declaration of all the companies to be sent to the Registrar of Companies and Official Liquidator. 11 SAXENA & SAXENA

Fast Track merger and amalgamation Fast Track merger and amalgamation for certain companies: In case ROC and OL has no objection then the scheme will be approved and will be final. And In case ROC and OL has make Objections Report to CG days CG shall file with tribunal for orders days 12 SAXENA & SAXENA

Merger & Amalgamation (Section 233) Amalgamation in public interest:  Powers with CG  Appeal in 30 days  Shall be laid before both the houses of parliament.  Preservation of books of accounts

Merger or Amalgamation of company with Foreign Companies Amalgamation between Indian company and company incorporated in countries as specified is now allowed with the prior approval of RBI in addition to the Tribunal. 14 SAXENA & SAXENA

Powers to acquire shares of descending shareholders  The scheme of the amalgamation or compromise may contain that company shall acquire the shares, the descending shareholders and  payment of such shares shall be made within 60 days from the date each transfer of shares have been registered. 15 SAXENA & SAXENA

NCLT & NCLAT

Professional Opportunity  As Technical Member  As Company Liquidator  As Registered Valuer  To represent parties  Specialised Authorised representative of Tribunal

Jurisdiction  Company Law Board  High Court Benches  BIFER

Pending matters on commencement of Provisions  All CLB matters:- Appeals to order of CLB before such date before High Court within 60 days or any extended time not further 60 days.  All proceedings of :-  Arbitration,  Compromise, Arrangement,  Winding up,  before District Court,  High Court shall stand transferred  Proceeding of BIFR AAFR:  shall stand abated,  company may make reference within 180 days from commencement of Act to NCLT.

Benches  Double Benches  Powers can be given to single bench :- Difference of opinion on any matter. Matter shall be referred to President.  Special Benches:-  Rehabilitation,  Restructuring,  Revival,  Winding up  Principal Bench:  New Delhi and presided by President

Representation (Rule 25)  Individual : in person or through authorised representative, legal practitioners.  Company:- By Director, CFO, CEO, Manager  CG/ ROC/ RD / OL:- Authorised officer / an advocate  Company Liquidator : In person

Powers of Tribunal NCLT shall not be bound by CPC, But shall be guided by provisions of CPC. Same powers as to Civil Court under CPC.  Summoning and enforcing the attendance of any person.  Examination on oath.  Production of documents.  Receiving evidence on affidavit.  Requesting for any public record.  Dismissing representation for default.  Setting a side order of dismissal of representation.  Setting a side exparte order

Powers of Tribunal  Power to contempt - as with High Court.  Any other matter as may be presented –  Granting stay and status quo order  Ordering injunction  Appointing Commissioner  Reviewing its own order for limited purpose.  Any order in the interest of justice.

Documents not to form part of Record (Rule 34)  Unless permitted by NCLT –  Written submission or reply filed after the expiry of time allowed.  Rejoinder filed with leave of tribunal or expiry of time.  Additional pleading without the leave of Tribunal.  Any other document not filed in time. Connected Matters: Common orders may be passed.

Substitution of Legal Representation  On death or insolvency.  If during pendency of proceeding.  Legal representative to apply within 90 days.  NCLT may allow ever after 90 days. Registration of A/R’s Clerks

Procedure  MOA / Vakalatnama / POA  Notice of mentioning to:-  Bench  Other parties  ROC / RD  State Government  Dress Code  Adjournment with Reasons (Rule 39)  Not more than 3 times to a party.  Except reasons beyond control of the party.

Rules 145 – existing 51  Completion of pleading (Paper book)  Arguments on :-  Facts  Legal issues  Withdrawl of petition/ application with the leave of Court.  Examination of witness on oath (witness shall be paid travelling and DA)

Rules 145 – existing 51  Non-Appearance:  NCLT may dismiss the petition / application. Review can be apply within 15 days of dismissal  NCLT may decide on merit.  Expertise Orders : If non-appearance of any party. Ex- parte order can be passed. Appeal against such order for set aside be made to Tribunal.  Order  Execution of order  Review of orders

Rules 145 – existing 51  Compliance of orders:-  Affidavit for compliance on the direction of NCLT  Failure to compliance shall not invalidate the order unless NCLT orders.

Appeal to NCLAT (Section 421)  No appeal on consent order.  Within 45 days from the date on which order was made available to parties. NCLT may further extend for next 45 days.  Appeals can be filed.

Section 422  All appeals / petitions be decided within 3 months from the presentation.  If not, Tribunal shall record its reasons and President may extend the period not exceeding 90 days. Appeal to Supreme Court  Against the order of NCLAT within 60 days on Question of Laws.  May exceeds the time limit for next 60 days.

SPECIAL COURTS

Special Courts (Section 435) The Central Government may for the purpose of providing speedy trial of offences under this Act by notification, establish or designate as many as special courts as may be necessary. The Special Court shall consist of single judge appointed by Central Government with concurrence of Chief Justice of High Court within the jurisdiction the judge be appointed as working. Before the appointment the person appointed as judge should be holding office of session judge or additional session judge. SAXENA & SAXENA 33

Offences Trialable by Special Courts  All offences under this Act.  Where person accused of, or suspected of commission of an offence under this Act is forwarded to Magistrate under this section or under section 2A of code of criminal procedure 1973, such court may  Authorise detention of such person in such custody for not exceeding 15 days (Judicial Magistrate).  For 7 days, if Magistrate is Executive Magistrate. SAXENA & SAXENA 34

Offences Trialable by Special Courts  In addition to the offence under this act:  Special Court may also try offence other than under this Act.  With which accused may be charged under CRFC, 1973 for such trial.  May try in a summary for an offence which is punishable with imprisonment upto 3 years. Provided no sentence of imprisonment is passed for more than 1 year.  All appeal against the order of Special Court shall be before High Court.  Provisions of CRPC shall apply to proceedings before Special Court. SAXENA & SAXENA 35

PENALTIES AND PROSECUTION

PENALTIES  Company  officer in default  auditor  CS/ Cost Accountant/ experts

PENALTIES Some of the important penalties provided in the new Companies Act, 2013:- 38 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum PenaltyMaximum Penalty 4(5)(ii)Reservation of the names by wrong particulars a)If incorporated b)In not incorporated Strike off the name. Cancelled the name Action u/s 447 or 448. Rs lac 8Non-Profit making companies i.Company – Rs lakh ii.Director /Officer – Rs.25,000/- Rs lakhs Imprisonment upto 3 years or with fine Rs lakhs

PENALTIES 39 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 11(2)Commencement of business without declaration: a)Company b)Officer If not complied within 180 days Rs.5,000/- Rs.1000/- per day Removal of name 12(8)Failure to intimate address of the registered office or its change a)Company b)Officer Rs. 1000/- per day Rs.1,00,000/-

PENALTIES 40 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 26Relating to the prospectus Rs.50,000/-Rs.3.00 lakh (with imprisonment which may extend to three years for every person in default) 39(5)Return for allotment : Company and officer Rs.1000/- per day Rs.1,00,000/-

PENALTIES 41 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 40Making public offer Rs.5.00 LakhsRs lakhs, (imprisonment one year or with fine Rs.50,000/- to Rs.3,00,000/- for every officer in default) 46Default in issue of duplicate certificate of shares with intend to defraud Five times of face value Ten times of face value or Rs crores whichever is higher and every officer shall be punishable under clause 447.

PENALTIES 42 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 64(2)Failure to intimate alteration in capital Rs.1000/- per day or Rs.5,00,000/- whichever is higher 66Reduction of capital Rs.5.00 LacsRs Lacs 74Repayment of deposit Rs.1.00 crores Rs crores (imprisonment which may extend to 7 years or with fine Rs lacs or Rs.2.00 crores for every officer in default).

PENALTIES 43 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 92(5)Filing of Annual Return after 330 days ( ) Company : Rs.50,000/- Officer : Imprisonment upto 6 months or fine Rs.50,000/- to Rs.5,00,000/- or both. Rs.5,00,000/- 117Filing of Resolutions and agreements ( ) Rs.5.00 LacsRs Lacs (with fine of Rs.1.00 lac to Rs.5.00 lacs for every officer in default).

PENALTIES 44 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum PenaltyMaximum Penalty 118Tampering of minutes Imprisonment upto 2 years or fine from Rs.25,000/- to Rs.1,00,000/- 128(6)Maintenance of the Books of accounts MD or Director incharge: Imprisonment upto one year or fine Rs.50,000/- or both Rs.5,00,000/ - or both 129(7)Financial Statements Directors : imprisonment upto one year or fine 50,000/- to 5,00,000/-

PENALTIES 45 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 134(8)Non-compliance in Board Report Company: Rs.50,000/- Officer: Imprisonment upto 3 years or fine Rs.50,000/- Rs.25,00,000/- Rs.5,00,000/- 140Filing of resignation by Auditors Rs.50,000/-Rs.5,00,000/- 143(15)Reporting of fraud to Central Government Rs.1,00,000/-Rs.25,00,000/-

PENALTIES 46 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum PenaltyMaximum Penalty 143, 144, 145 On AuditorsRs25,000/-Rs.5,00,000/- 147If intention to deceive Where convicted Imprisonment for one year Refund the remuneration, pay damages. Liability of partners, firm shall be jointly or severally. Fine Rs.1,00,000/- to Rs.25,00,000/-

PENALTIES 47 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum PenaltyMaximum Penalty 164Dis-qualification of the Directors Imprisonment for one year Fine Rs.1,00,000/- to Rs.25,00,000/- or both 184(4)Failure to disclose interest by Directors Imprisonment for one year Fine Rs.50,000/- to Rs.1,00,000/- or both

PENALTIES 48 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 185Loan to Directors Company: Rs.5,00,000/- Directors to whom loan given: imprisonment for 6 months Rs.25,00,000/- Fine Rs.5,00,000/- to Rs.25,00,000/- 186Investment of Loan Company: Rs.25,000/- Officer in default: imprisonment upto 2 years Rs.5,00,000/- Fine Rs.25,000/- to Rs.1,00,000/-

PENALTIES 49 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 195Insider tradingImprisonment upto 5 years or with fine Rs.5,00,000/- Imprisonment upto 5 years or with fine Rs crores or three times of amount of profit earned whichever is higher. 203Non- appointment of KMP or MD Fine Rs.1,00,000/- and Rs.1000/- per day. Fine Rs.5,00,000/-

PENALTIES 50 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum Penalty Maximum Penalty 447FraudImprisonment : six months to ten years Fine : equivalent to amount of fraud Amount equivalent to three times of fraud amount 448False statement Imprisonment : six months to ten years Fine : equivalent to amount of fraud Amount equivalent to three times of fraud amount 449False evidence 3 years imprisonment Fine upto Rs.10,00,000/-

PENALTIES 51 SAXENA & SAXENA SectionParticulars and nature of penalty Minimum PenaltyMaximum Penalty 450Not provided in any provision Rs.10,000/-Rs. 1000/- per day 451Repeated offence in three years Twice of the fine 452Wrongly holding of property of company Fine Rs.1,00,000/- Fine Rs.5,00,000/-

Adjudication of offences  by adjudicating officers  Appeal to RD : 60 days  Payment of penalty: 90 days If default:- Company: Rs to 5 lakh Officer: Rs to 1 lakh Imp. Up to 6 month

Prosecution / Compounding of Offence  Suo Moto  Prosecution is filed by ROC

THANK YOU 54 SAXENA & SAXENA