Guiding companies through a merger can be tricky and a lot depends on the focus and persuasive skills of legal counsel

Rebecca Abraham reports

Big-ticket transactions such as the recent US$4 billion acquisition of Ranbaxy by Sun Pharma, grab the headlines from time to time. But such instances of inorganic growth are few and far between in comparison with the large number of mergers among mid-market companies that take place regularly across India.

The Companies Act, 1956, provides for a court-driven process for mergers that result in one company being absorbed by another. Sections of the Companies Act, 2013, that deal with mergers are yet to be notified. (See Understanding the process on page 29 and the correspondent column on page 80 for more on the new act.)

Shepherding companies through the court-driven process of obtaining approval for a scheme of amalgamation under sections 391 to 394 of the Companies Act, 1956, is a challenge. Apart from being time-consuming, the scheme can face objections from the various authorities that are required to approve it.

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