COMPROMISE AND ARRANGEMENT ‘Compromise’ is an expression which implies the existence of a dispute such as relating to rights, which it seeks to settle.‘Arrangement’ is a term of very wide import, and its meaning is not to be limited to something analogous to a compromise to a compromise.Any proposal of amalgamation or merger begins with the process of due diligence, as the proposal for merger without due diligence is like entering a tunnel with darkness growing with each step.
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If the creditor wrongfully refuses to agree on the scheme, the Court cannot sanction the scheme or probe into the mala fide refusal of creditors to refuse the approval of the scheme.
MRTP Companies- Amalgamation Where two companies are carrying on the same business, there was no need to file application under section 23 of MRTP Act for amalgamation thereof, although both companies are registered under MRTP Act and requirements under section 23(3) of MRTP Act is fulfilled.
Where Company fails to make the application, a creditor or contributor may make the application.
CHAIRMAN’S REPORT While, sectioning the scheme of arrangement or compromise, the court may issue directions or make modification in the scheme as may be thought appropriate for proper working of scheme.
The role of Chartered Accountants, in any amalgamation case, cannot be undermined as without their uncanny insight within the financial maze, no due diligence, valuation, share exchange ratio etc. Interpretation of Section Meaning of Company The expression ‘company’ includes an unregistered company.
The court having jurisdiction is the court at the place where the unregistered company reside and has its principal place of business.
PROCEEDINGS It includes both civil and criminal proceedings.
Where directors are sought to be proceeded against criminally for their act as director by the creditor pending the consideration of a scheme of arrangement, the criminal proceeding can be stayed for the limited purpose so that the directors are not pressurized by the creditors and the scheme can be considered effectively.
CHAIRMAN’S REPORT After approval of scheme by creditors or members, the Chairman is required to file his report within seven days of conclusion of meeting.