COMPROMISE AND ARRANGEMENT ‘Compromise’ is an expression which implies the existence of a dispute such as relating to rights, which it seeks to settle.
‘Arrangement’ is a term of very wide import, and its meaning is not to be limited to something analogous to a compromise to a compromise.
CREDITOR’S RESOLUTIION – NECESSARY The creditors have to pass requisite resolution for a scheme on arrangement or compromise with them.
Differs from a consolidation in that no new entity is created from a merger The terms merger and amalgamation have not been defined in the Companies Act, 1956 (hereinafter referred to as the Act) though this voluminous piece of legislation contains 69 definitions in Section 2.
The concept paper recently issued by the Ministry of Company Affairs, the fate of which is still unknown, contained 100 such definitions but still stopped short of defining merger or amalgamation.
The Act and the relevant rules pertaining to amalgamation are to be followed scrupulously.
The provisions of the Act also deal with compromise or arrangement within or without amalgamation or merger.