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CS Professional · Corporate Restructuring, Valuation and Insolvency · Documentation - Merger and Amalgamation

Sunrise Textiles Ltd, a transferor company, merged into Vardhan Mills Ltd under an approved scheme. Before the merger, the officers in default of Sunrise had committed an offence under the Companies Act, 2013. After the merger, what is the position on their liability for that offence?

Liability of the transferor company's officers in default for offences committed before the merger continues after the merger. Section 240 applies notwithstanding any other law, so dissolution of the transferor and the Tribunal order do not wipe it out, and no express saving clause is needed.

  1. ALiability lapses because the transferor company stands dissolved
  2. BLiability transfers only to the officers of Vardhan Mills Ltd
  3. CLiability continues after the merger despite the transferor's dissolutionCorrect
  4. DLiability continues only if the Tribunal order expressly saves it

Explanation

Section 240 provides that, notwithstanding any other law, the liability of officers in default of the transferor company for offences under the Act committed before the merger continues after the merger. It does not depend on a saving clause in the Tribunal's order, and dissolution does not extinguish it.

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