MCA Opens A New Way Out For An Old Problem – Squeezing Out The Minority Shareholders From A Company

The Ministry of Corporate Affairs, Government of India ("MCA") vide its Notification dated February 3, 2020, has brought into effect the eagerly anticipated sub-sections (11) and (12) of the Section 230 of the Companies Act, 2013 ("CA2013"). These provisions facilitate the takeover of the company/squeezing out the minority shareholders under a scheme of compromise/arrangement. While the remaining provisions of Section 230 of the CA2013, and for that matter the whole Chapter XV of the CA2013 relating to compromise, arrangements and amalgamations, were brought into effect in the year 2016, it has taken the MCA well over 3 (three) years to notify these key provisions.

Simultaneously with the commencement of Section 230 (11) and (12) of CA2013, the MCA has also notified the consequential revisions to the National Company Law Tribunal Rules, 2016 and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 ("Rules"), laying down the procedural aspect for