MCA has notified sub-sections 11 and 12 of Section 230 of the Companies Act 2013 with effect from 3 February 2020. The said sub-sections provide that any compromise or arrangement may include a takeover offer and that a party aggrieved by such a takeover offer in respect of public unlisted companies and private companies may make an application to the Tribunal in the manner prescribed. The takeover offer for listed companies shall be as per the Takeover Regulations 2011.

Along with the notification of the aforesaid sub-sections of section 230, MCA has notified amendments to the Companies (Compromises, Arrangements and Amalgamations) Rules 2016. A new sub-rule (5) of Rule 4 provides that where a member, along with any other member, holds not less than three-fourths of the shares in the company and intends to acquire any part of the remaining shares of the company, it shall make an application for arrangement for the purpose of takeover offer in terms of sub-section 11 of section 230. The application must be accompanied by a report of a registered valuer that takes into account (i) the highest price paid by any person for shares acquired during the last twelve months and (ii) the fair price of shares after taking into account valuation parameters, including net-worth, book value of shares etc. The application shall also contain details of a bank account, opened separately by the member, in which an amount of not less than one-half of the total consideration of the takeover offer is deposited.

“Shares” means the equity shares of the company carrying voting rights and includes any securities, such as depository receipts, which entitles the holder thereof to exercise voting rights. However, this sub-rule will not apply to the transfer or transmission of shares through a contract, arrangement or succession or any transfer made in pursuance of any statutory or regulatory requirement.

The National Company Law Tribunal Rules 2016 have also been amended to provide for the Form of application for takeover offer of companies which are not listed, the applicable Fees and additional documents required to be filed before the Tribunal.

To refer to the commencement notification dated 3 February 2020, click here. To refer to the Companies (Compromises, Arrangements and Amalgamations) (Amendment) Rules 2020, click here, and to refer to the National Company Law Tribunal (Amendment) Rules 2020, click here.