Corporate Transactions - Proposed Amendments to Companies Act, 2014

The Companies (Corporate Enforcement Authority) Bill, 2021 has now been published, see here. The principal purpose of the Bill is the establishment of the Corporate Enforcement Authority. However, corporate counsel and others who advise on corporate transactions should also familiarise themselves with Parts 3, 4 and 5 of the Bill which provide for certain amendments to share capital, corporate governance and other miscellaneous provisions of Companies Act, 2014. These include:

• proposed amendments to Section 91 to provide that neither the summary approval procedure nor the confirmation of a court will be required to implement what is commonly referred to as a share for undertaking transaction where the transferor has sufficient distributable reserves;
• a proposed amendment to the definition of “distribution” in Section 123 to exclude from that definition reductions of capital by paying off company capital in accordance with Section 84 or extinguishing or reducing of a member’s liability on shares not fully paid up in accordance with Section 84; and
• an amendment to address the oversight that a redemption or buyback of shares in an ULC must be funded from profits available for distribution or the proceeds of a fresh issue of shares.