Section 237: Power of Central Government to provide for amalgamation of companies in public interest
This section allows the Central Government to order the amalgamation of companies in the public interest, and sets out the procedures and provisions for doing so.
The section, clause by clause
What the section says
In plain terms
(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.
The Central Government can order the amalgamation of two or more companies into a single company if it is in the public interest, and can specify the constitution, property, and liabilities of the new company.
(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.
The order can also provide for the continuation of legal proceedings and make other necessary provisions 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.
Members and creditors of the original companies will have the same rights against the new company, and if their rights are reduced, they will be entitled to compensation, which will be assessed and published in the Official Gazette.
(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.
Anyone aggrieved by the assessment of compensation can appeal to the Tribunal within 30 days of publication.
(5)No order shall be made under this section unless—
No order can be made unless a draft has been sent to the companies, any appeals have been disposed of, and the Central Government has considered suggestions and objections from the companies, shareholders, or creditors within at least 2 months.
(5)(a)a copy of the proposed order has been sent in draft to each of the companies concerned;
(5)(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
(5)(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.
Copies of every order made under this section will be laid before each House of Parliament as soon as possible.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.