MCA allows Start –up companies to enter scheme of merger and amalgamation

  • Corporate law
  • notification
  • financeseva

The Ministry of Corporate Affairs (MCA) has notified the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021 whereby a new sub-rule (1A) has been inserted to the Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.  

The new sub-rules allow merger and amalgamation between i.e. two or more start-up companies; or ii. One or more start-up companies with one or more small companies.  

Under section 233(1) of the Companies Act, 2013, a scheme of merger or amalgamation may be entered into between two or more small companies or between a holding company and its wholly owned subsidiary company or such other class or classes of companies as may be prescribed.  

Explanation for the purpose of this sub-rule, “start-up company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognized as such in accordance with notification number G.S.R. 127 (E), dated the 19thFebruary, 2019 issued by the Department for Promotion of Industry and Internal Trade.