The Ministry of Corporate Affairs has notified section 230(11) and section 230 (12) of the Companies Act, 2013, which pertain to takeover offers in case of an unlisted company, vide its notification dated 3 February 2020. Section 230 (11) of the Companies Act provides that takeover offer in case of unlisted companies can be made through a scheme of compromise or arrangement, while in case of listed companies, takeover offers must be made as per regulation prescribed by Securities and Exchange Board of India (SEBI). The newly notified provisions are significant since they introduce a mechanism for the squeeze-out of minority shareholders through a court-approved scheme. The mechanism for such takeover offers in case of unlisted companies have been specified in the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020 (Amendment Rules), notified on 3 February 2020 amending Rule 3 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (2016 Rules).
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The business law digest is compiled by Nishith Desai Associates, a research-based international law firm with offices in Mumbai, New Delhi, Bengaluru, Singapore, Silicon Valley, Munich and New York. The firm specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.
