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Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 Amended to Ensure Timely Issuance of Orders by Regional Director

The Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 have undergone a significant amendment to facilitate a more streamlined and time-bound process for issuing orders. The amended Rule 25 empowers the Regional Director (RD) to issue orders promptly, ensuring efficient resolution of corporate restructuring and amalgamation cases. This amendment, which comes into effect from June 15, 2023, introduces strict timelines and provisions for cases where no objections are received, as well as cases where objections are raised.

One of the noteworthy changes in the amended rules is related to cases where no objection is raised by the Registrar of Companies (RoC) and Official Liquidator (OL). According to the revised Rule 25, if there are no objections from the RoC and OL, the RD must issue the confirmation order within 45 days of receiving the scheme. In instances where the RD fails to issue the confirmation order within 60 days of receiving the scheme, it will be deemed that the RD has no objection to the scheme, and a confirmation order shall be issued accordingly. This provision significantly accelerates the process for cases where there are no objections, avoiding unnecessary delays and ensuring a more efficient resolution.

Furthermore, the amended rules address situations where objections are raised by the RoC, OL, or any other party. If the RD receives objections and fails to issue a confirmation order within 60 days of receiving the scheme, or if no application is filed before the National Company Law Tribunal (NCLT) based on the objections received within the same 60-day period, it will be considered that the RD has no objection to the scheme. In such cases, a confirmation order will be issued accordingly. This provision encourages the RD to address objections in a timely manner or risk their objections being considered void, promoting expeditious decision-making and resolution.

The amendment to the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 aligns with the objective of promoting efficiency and expediency in the corporate restructuring and amalgamation processes. By introducing specific timeframes and consequences for the RD's failure to issue orders within the stipulated period, the amended rules aim to minimize delays, enhance transparency, and foster a more predictable regulatory environment.

The provision empowering the RD to issue confirmation orders within 45 days when no objections are raised enables companies to move forward swiftly with their restructuring plans. It reduces uncertainty and provides reassurance to stakeholders involved in the process. Additionally, the provision ensuring that objections are promptly addressed or deemed void emphasizes the importance of a time-bound resolution and encourages all parties to engage in a constructive and expedient manner.

The amended Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 reflect a commitment to enhancing the ease of doing business and strengthening corporate governance in India. These changes, effective from June 15, 2023, bring greater clarity, efficiency, and predictability to the process of issuing orders in corporate restructuring and amalgamation cases. The inclusion of strict timelines and consequences for non-compliance ensures that all stakeholders benefit from a more streamlined and time-bound resolution process, promoting a healthy business environment in the country.