{"id":950,"date":"2021-01-06T06:55:57","date_gmt":"2021-01-06T06:55:57","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=950"},"modified":"2021-01-06T07:05:15","modified_gmt":"2021-01-06T07:05:15","slug":"companies-compromises-arrangements-amalgamation-second-amendment-rules-2020","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/","title":{"rendered":"Companies (Compromises, Arrangements &#038; Amalgamation) Second Amendment Rules 2020: Key Highlights"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In exercise of the powers bestowed by sub sections (1) and (2) of section 469 of the Companies Act 2013 read with section 230 of the same act, the Central Government hereby implement the following rules, to amend and improvise the Companies (Compromises, Arrangements &amp; Amalgamations) Rules 2016, namely, the&nbsp;Companies (Compromises, Arrangements &amp; Amalgamations) Second Amendment Rules 2020. <\/p>\n\n\n\n<p>Further, the said rules are in force from 17.12.2020, i.e., the date of the publication in the Official Gazette.<\/p>\n\n\n\n<p>In this blog, we will discuss the key highlights of the Companies (Compromises, Arrangements &amp; Amalgamation) Second Amendment Rules 2020.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a85a475538\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a85a475538\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Key_Highlights_of_Companies_Compromises_Arrangements_Amalgamations_Second_Amendment_Rules_2020\" title=\"Key Highlights of Companies\n(Compromises, Arrangements &amp; Amalgamations) Second Amendment Rules 2020\">Key Highlights of Companies\n(Compromises, Arrangements &amp; Amalgamations) Second Amendment Rules 2020<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Insertion_of_Word_%E2%80%9CCorporate_Action%E2%80%9D\" title=\"Insertion of Word \u201cCorporate\nAction\u201d\">Insertion of Word \u201cCorporate\nAction\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Insertion_of_Rule_26A\" title=\"Insertion of Rule 26A\">Insertion of Rule 26A<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Verification_of_the_Details_of_Minority_Shareholders\" title=\"Verification of the Details of Minority Shareholders\">Verification of the Details of Minority Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Send_the_Notice_to_Minority_Shareholders\" title=\"Send the Notice to Minority Shareholders\">Send the Notice to Minority Shareholders<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Publish_the_Notice_in_Newspapers\" title=\"Publish the Notice in Newspapers\">Publish the Notice in Newspapers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Inform_Depository_Regarding_Cutoff_Dates\" title=\"Inform Depository Regarding Cutoff Dates \">Inform Depository Regarding Cutoff Dates <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Authorise_Company_Secretary\" title=\"Authorise Company Secretary\">Authorise Company Secretary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Transfer_of_Shares\" title=\"Transfer of Shares\">Transfer of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Disbursal_of_Share_Price\" title=\"Disbursal of Share Price \">Disbursal of Share Price <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Transfer_Shares_to_Acquirers_Demat_Account\" title=\"Transfer Shares to Acquirer\u2019s Demat Account\">Transfer Shares to Acquirer\u2019s Demat Account<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Exception_to_Transfer_of_Shares_to_Acquirers_Demat_Account\" title=\"Exception to Transfer of Shares to Acquirer\u2019s Demat Account\">Exception to Transfer of Shares to Acquirer\u2019s Demat Account<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/blog\/companies-compromises-arrangements-amalgamation-second-amendment-rules-2020\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Highlights_of_Companies_Compromises_Arrangements_Amalgamations_Second_Amendment_Rules_2020\"><\/span>Key Highlights of Companies\n(Compromises, Arrangements &amp; Amalgamations) Second Amendment Rules 2020<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key highlights of the Companies (Compromises, Arrangements &amp; Amalgamations) Second Amendment Rules 2020 are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Key-Highlights-of-Companies-Compromises-Arrangements-Amalgamations-Second-Amendment-Rules-2020-heading.png\" alt=\"Key Highlights of Companies Rules 2020\" class=\"wp-image-952\" width=\"644\" height=\"311\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Key-Highlights-of-Companies-Compromises-Arrangements-Amalgamations-Second-Amendment-Rules-2020-heading.png 985w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Key-Highlights-of-Companies-Compromises-Arrangements-Amalgamations-Second-Amendment-Rules-2020-heading-300x145.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/01\/Key-Highlights-of-Companies-Compromises-Arrangements-Amalgamations-Second-Amendment-Rules-2020-heading-768x371.png 768w\" sizes=\"(max-width: 644px) 100vw, 644px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Insertion_of_Word_%E2%80%9CCorporate_Action%E2%80%9D\"><\/span>Insertion of Word \u201cCorporate\nAction\u201d<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Central Government has decided to\ninsert the word \u201cCorporate Action\u201d after clause (d), sub rule (1) in Rule (2)\nin the said rules. <\/p>\n\n\n\n<p>Further, the term \u201cCorporate Action\u201d denotes any action taken by the company pertaining to the transfer of shares and all the benefits and privileges arising on such shares, specifically, bonus shares, consolidation, split, fraction shares, and right issue to the acquirer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Insertion_of_Rule_26A\"><\/span>Insertion of Rule 26A<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The MCA or the Ministry of Corporate Affairs seeks to insert Rule 26A in the Companies Second Amendment Rules 2020. Further, this rule relates to the purchase of minority shareholding held in the form of a Demat.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Verification_of_the_Details_of_Minority_Shareholders\"><\/span>Verification of the Details of Minority Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>According to the new Rule 26 A, a\ncompany shall within a period of two weeks, starting from the date of receipt\nof the amount equal to the share price acquired by the acquirer, under section\n236 of the Companies Act 2013, verify the details and particulars of the\nminority shareholders holding shares in dematerialized form.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Send_the_Notice_to_Minority_Shareholders\"><\/span>Send the Notice to Minority Shareholders<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Further, after the process of verification, the said company will send a notice to the minority shareholders regarding the cutoff date, which should not be earlier than 1 month from the date of sending the notice. Furthermore, the term cutoff denotes a date on which the shares held by minority shareholders will be debited from their account and credited to the designated or decided Demat Account of the company. However, it shall be relevant to state that for crediting the shares in the Demat account, the shares need to be first credited in the account of the acquirer, as prescribed in the notice, prior to cut off date.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Publish_the_Notice_in_Newspapers\"><\/span>Publish the Notice in Newspapers<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Moreover, the company needs to publish\nthe notice sent to the shareholders in 2 widely circulated newspapers, out of\nwhich one will be in English and the other one in the Vernacular Language of\nthe district where the company has its registered office. Also, the same will\nbe uploaded on the official website of the company.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Inform_Depository_Regarding_Cutoff_Dates\"><\/span>Inform Depository Regarding Cutoff Dates <span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Thereafter the company will immediately\ninform the depository regarding the cut-off date and shall submit the\ndeclarations stating the following:<\/p>\n\n\n\n<ol><li>The Corporate Action has been effected in accordance with the provisions of section 236 of the Companies Act;<\/li><li>All the Minority Shareholders whose shares are maintained in dematerialized form have been duly informed about the Corporate Action;<\/li><li>The Minority Shareholders will be paid by the company instantly after the successful completion of the Corporate Action;<\/li><li>Any future dispute or complaints rising out of such corporate action will be the sole responsibility of the said company;<\/li><\/ol>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Authorise_Company_Secretary\"><\/span>Authorise Company Secretary<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>For the purpose of carrying out the transfer of shares by way of corporate action, the Board of Directors shall authorize the CS or Company Secretary, or in his\/her absence any other person, to notify or inform the depository and submit documents.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_of_Shares\"><\/span>Transfer of Shares<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Upon receipt of information, the depository\nwill make the transfer of shares into the designated Demat Account of the\ncompany. Further, such shares will be transferred on the cutoff date.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disbursal_of_Share_Price\"><\/span>Disbursal of Share Price <span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>After receiving the intimation of the successful\ntransfer of shares, the company will now disburse the price of shares\ntransferred on an immediate basis to each of the minority shareholders.\nFurther, the same will be done after deducting the prevailing stamp duty. <\/p>\n\n\n\n<p>Also, such a stamp duty will be paid by the company on behalf of the minority shareholders, based on the provisions of the <strong>Indian Stamp Act 1899<sup><a href=\"https:\/\/www.indiacode.nic.in\/bitstream\/123456789\/5746\/1\/indianstampactenglish_1899_searchable.pdf\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong>.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_Shares_to_Acquirers_Demat_Account\"><\/span>Transfer Shares to Acquirer\u2019s Demat Account<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Now, after the successful disbursal of\nshare price, the company will inform the depository about the same so that the\ndepository is able to credit the shares kept in the Demat account to the\nacquirer\u2019s Demat account.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exception_to_Transfer_of_Shares_to_Acquirers_Demat_Account\"><\/span>Exception to Transfer of Shares to Acquirer\u2019s Demat Account<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>In the case, where a court or tribunal,\nthrough its order, has restricted the transfer of shares or payment of\ndividend, then, in that case, the depository will not transfer the shares to\nthe designated Demat Account. Further, the same will prevail in the case where\nsuch shares are pledged or hypothecated based on the provisions of the\nDepositories Act 1996.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, the Companies Second Amendment Rules 2020 majorly deals with two amendments, i.e., Insertion of the word \u201cCorporate Action\u201d and Insertion of section 26A, former deals with the action taken by the company pertaining to the transfer of shares and all the benefits and privileges arising on such shares, whereas, the latter deals with the purchase of minority shareholding held in the form of Demat.<\/p>\n\n\n\n<p>Lastly, in case of any other doubt and dilemma, visit <strong><a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/\">Swarit Advisors<\/a><\/strong>, our professionals are always there to cater to your needs and requirements concerning Merger and Amalgamation Companies Second Amendment Rules 2020.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/companies-appointment-and-qualification-of-directors-fifth-amendment-rules-2020\/\">Companies (Appointment &amp; Qualification of Directors) Fifth Amendment Rules 2020: A Detailed Summary<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In exercise of the powers bestowed by sub sections (1) and (2) of section 469 of the Companies Act 2013 read with section 230 of the same act, the Central Government hereby implement the following rules, to amend and improvise the Companies (Compromises, Arrangements &amp; Amalgamations) Rules 2016, namely, the&nbsp;Companies (Compromises, Arrangements &amp; Amalgamations) Second [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":951,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50],"tags":[150],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/950"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=950"}],"version-history":[{"count":4,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/950\/revisions"}],"predecessor-version":[{"id":957,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/950\/revisions\/957"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/951"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}