The central governmenthas recently made significant amendments to the Companies Amalgamations, Arrangements, Compromises Rules of 2016, aiming to streamline the processes involved in company liquidation and mergers. These changes are expected to have a positive impact on startups and small companies while not significantly affecting larger corporate enterprises.

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Under the new rules, the government has introduced provisions that grant it the authority to issue a no objection certificate (NOC) for the liquidation of a company. This NOC can be issued if it is recommended by both the registrar and the liquidator within a period of 30 days. Furthermore, the government reserves the right to issue an NOC within 15 days after the expiry of the initial 30-day period. In a move to ensure timely decision-making, the government has set a deadline of 60 days for issuing an order. If the government does not issue an order within this timeframe, the proposed scheme will be considered approved.

According to Rudra Kumar Pandey, a Partner at Shardul Amarchand Mangaldas, these amendments will prove beneficial to startups and small companies. The simplified procedures and streamlined timelines will enable them to navigate the complexities of amalgamations, arrangements, and compromises more efficiently. On the other hand, larger corporate enterprises are unlikely to be significantly impacted by these rule changes. Pandey added that the overall timeline for mergers remains largely unchanged even under the new rules.

It is important to note that the amendments primarily focus on expediting the process of fast-track mergers. To execute such mergers, companies will need to file a notice indicating their intention to pursue the fast-track route.

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Pandey clarified that the amendments do not directly impact the Insolvency and Bankruptcy Code (IBC) processes. These changes solely pertain to amalgamations, arrangements, and compromises within the corporate sector and do not alter the existing framework of IBC processes.