Q. Legal and procedural aspects of the merger?
Approval of board of directors: after the approval of this scheme by the respective boards of directors it must be put before the share holders. According to section 391 companies act, the amalgamation or merger scheme should be approaved at a meeting of the members three fourth in the value and majority in number, whether present in person or by proxies. In case the scheme involves exchange of the shares, it is necessary that is approaved by not less than 90 per cent of the share holders (in value) of the transfer company of deal effectively with the dissenting share holders.
Consideration of interests of the creditors: the views of creditors should also be taken into consideration. According to section 391, amalgation scheme should be approaved by the majority of creditors in the number and three fourth in value.
Considerations of interestes of the creditors: the views of the creditors should also be taken into consideration. According to section 391.
Approval of the court: after getting the scheme approved, an application is filled that court of its sanction. The court will consider the viewpoint of all parties appearing, if any, before it, before giving, its consent. It will see that the interests of all concerned parties are protected in the amalgation scheme. The court may aspect, modify or reject an amalgation scheme and pass orders accordingly. However, it is upto the share holders whether to accept the modified scheme or not. It may be noted that no scheme of the amalgation can go through unless the resistor of companies sends a report of court to the effect that the affairs of the company have not been conducted as to be prejudicial to the interests of its members or to the public interest.
Clearance under MRTP act: every scheme of amalgation or merger requires the approval of central government under MTRP act. The idea behind this approval is to see that it does not result in control, ownership and management of im[portant undertakings into a few hands and which is not likely to be in the public interest. Any scheme of amalgation or merger leading to concentration of the economic power is not allowed by the government.