{"id":35670,"date":"2023-05-27T05:09:25","date_gmt":"2023-05-26T23:39:25","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=35670"},"modified":"2025-04-21T09:57:19","modified_gmt":"2025-04-21T04:27:19","slug":"process-of-merger-in-india","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/process-of-merger-in-india\/","title":{"rendered":"Process of Merger in India"},"content":{"rendered":"<h3><strong>What\u2019s in today\u2019s article?<\/strong><\/h3>\n<ul>\n<li><strong>Why in News?<\/strong><\/li>\n<li><strong>The Process of Merger in India<\/strong><\/li>\n<li><strong>Reasons behind Mergers<\/strong><\/li>\n<li><strong>The Merger Proposal<\/strong><\/li>\n<li><strong>The NCLT and the NCLAT<\/strong><\/li>\n<li><strong>News Summary Regarding Zee-Sony Merger<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Why in News?<\/strong><\/h2>\n<ul>\n<li>Providing major relief to Zee Entertainment Enterprises Ltd (ZEEL), the NCLAT set aside the NCLT order that had directed the NSE and BSE to reconsider their approval for the Zee-Sony merger.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>The Process of Merger in India:<\/strong><\/h2>\n<ul>\n<li><strong>A \u2018Merger\u2019<\/strong> essentially means an arrangement whereby one or more existing companies merge their identity into another to form a new and different entity.<\/li>\n<li><strong>It is a corporate strategy<\/strong> to enhance the financial and operational strengths of both organisations and has been carried out in accordance with <strong>the Companies Act 2013.<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<figure class=\"media\">\n<div data-oembed-url=\"https:\/\/www.youtube.com\/watch?v=c30Aa-e4kNc\">\n<div><iframe src=\"https:\/\/www.youtube.com\/embed\/c30Aa-e4kNc\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<\/div>\n<\/figure>\n<p>&nbsp;<\/p>\n<h2><strong>Reasons behind Mergers:<\/strong><\/h2>\n<p>\u00a0<img decoding=\"async\" src=\"https:\/\/vajiramandravi-test.s3.us-east-1.amazonaws.com\/media\/content\/ckeditor\/2023\/06\/08\/image-20230608151040-1.png\" alt=\"\" \/><\/p>\n<h2><strong>The Merger Proposal:<\/strong><\/h2>\n<ul>\n<li>It must be approved by the boards of directors of both companies and they must pass a special resolution authorising their <strong>Key Management Personnel<\/strong> to carry out the process.<\/li>\n<li>Then, an application is filed with the respective jurisdiction\u2019s <strong>High Court<\/strong>.<\/li>\n<li>Under the Companies Act 2013, the <strong>National Company Law Tribunal<\/strong> (NCLT) is entrusted with the powers of merger, de-merger.<\/li>\n<li>The merger plan approved by the NCLT can be challenged in the <strong>National Company Law Appellate Tribunal<\/strong> (NCLAT) by the dissenting parties (if any).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>The NCLT and the NCLAT:<\/strong><\/h2>\n<ul>\n<li>NCLT is a <strong>quasi-judicial body<\/strong> established (2016) under the Companies Act 2013 to adjudicate issues relating to Indian companies.\n<ul>\n<li>It is based on the recommendation of the <strong>V. Balakrishna Eradi committee<\/strong> on law relating to the insolvency and the winding up of companies.<\/li>\n<li>Its bench is chaired by a Judicial member who is supposed to be a <strong>retired or a serving HC Judge<\/strong> and a Technical member who must be from the Indian Corporate Law Service.<\/li>\n<li><strong>It is the adjudicating authority for the insolvency resolution<\/strong> process of companies and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016<\/li>\n<\/ul>\n<\/li>\n<li><strong>NCLAT <\/strong>is a tribunal formed under the Companies Act 2013 as a body with an appellate jurisdiction on the decisions made by the NCLT.<\/li>\n<li><strong>No criminal court<\/strong> shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act.<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<h2><strong>News Summary Regarding Zee-Sony Merger:<\/strong><\/h2>\n<ul>\n<li><strong>Background:<\/strong>\n<ul>\n<li><strong>In 2021<\/strong>, Sony Pictures Networks India and ZEEL entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations, etc.<\/li>\n<li>As per the scheme of the arrangement,<strong> Sony will indirectly hold 50.86%<\/strong> of the combined company.<\/li>\n<li>The founder of Zee will own around 4% and the rest will be with the other shareholders of ZEEL.<\/li>\n<li>Apart from the BSE and NSE approval and the Competition Commission of India\u2019s nod, <strong>the shareholders of Zee had already given their assent to the merger.<\/strong><\/li>\n<\/ul>\n<\/li>\n<li><strong>The NCLT order and challenge:<\/strong>\n<ul>\n<li>The NCLT had directed NSE and BSE <strong>to reconsider their prior approvals for the merger<\/strong> of ZEEL and Culver Max Entertainment.<\/li>\n<li>The NCLT order was challenged by ZEEL before the appellate tribunal, <strong>contending that it was not granted adequate opportunity by the NCLT to present its side<\/strong>.\n<ul>\n<li>It also contended that the NCLT doesn\u2019t have jurisdiction over <strong>non-compete issues<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<li>The NCLAT order came on hearing the appeal filed by ZEEL against the order passed by the Mumbai bench of the NCLT.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>\u00a0Q1) What is the Insolvency and Bankruptcy Code, 2016 (IBC)?<\/strong><\/h3>\n<p>It is an Indian law which creates a consolidated framework that governs insolvency and bankruptcy proceedings for companies, partnership firms, and individuals.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<h3><strong>Q2) Why was the Company Act 2013 enacted?<\/strong><\/h3>\n<p>The Companies Act 2013 was introduced to improve corporate governance and ease the process of doing business in India by providing business-friendly corporate regulation.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/indianexpress.com\/article\/business\/nclat-sets-aside-nclt-order-on-zee-sony-merger-8630880\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>NCLAT gives relief to Zee on Sony merger, sets aside tribunal order<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A merger is a corporate strategy to enhance the financial and operational strengths of both organisations.<\/p>\n","protected":false},"author":5,"featured_media":35671,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-35670","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/35670","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=35670"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/35670\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/35671"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=35670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=35670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=35670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}