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CS Executive · Company Law and Practice · Compromise, Arrangement and Amalgamations - Concepts

Mehta Textiles Ltd and Sharma Fabrics Ltd propose a merger under Section 232 of the Companies Act, 2013. The last annual accounts of Sharma Fabrics Ltd relate to a financial year that ended eight months before the first meeting summoned to approve the scheme. Which additional document must be circulated for the meeting?

A supplementary accounting statement must be circulated. Under Section 232(2)(e), where the last annual accounts of a merging company relate to a financial year ending more than six months before the first meeting, such a statement is required. Eight months exceeds that limit.

  1. AA supplementary accounting statementCorrect
  2. BA fresh statutory audit report for the next year
  3. CA solvency declaration by all the shareholders
  4. DA Registrar's certificate of no objection

Explanation

Section 232(2)(e) requires a supplementary accounting statement where the last annual accounts of any merging company relate to a financial year ending more than six months before the first meeting. Eight months exceeds six months, so the statement is needed. The other items are not required by that clause.

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