MCA’s new rules to expedite M&As within 15-60 days

Effective from May 15, the Ministry of Corporate Affairs (MCA) has introduced new rules named the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023, to expedite the approval process for mergers and acquisitions (M&As). The revised regulations aim to provide faster clearance within a timeframe of 15 to 60 days.

Under the newly implemented rules, if the Registrar of Companies (RoC) and official liquidator do not raise objections or suggestions within 30 days of receiving the scheme, the Ministry of Corporate Affairs (MCA) can issue a confirmation order within 15 days, provided it is in the public interest or beneficial to creditors. In cases where objections are raised but deemed unsustainable and the scheme is in the public interest, the MCA may issue a confirmation order within 60 days.

For M&A transactions that are not deemed beneficial to public interest, the MCA can file an application for review before the tribunal.In the event that the government does not issue a confirmation order or submit an application within 60 days, the merger or amalgamation scheme will be deemed approved by default.

These new rules are anticipated to have a significant impact on the startup ecosystem, as more M&A activities are expected amidst funding challenges. Startups struggling with poor unit economics may turn to M&A deals for survival.

The revised rules for M&As aim to streamline the approval process, offering a more efficient framework for companies seeking to undergo mergers and amalgamations.