All the companies in India have to follow the provisions of The Companies Act in order to be registered and function within the jurisdiction of India. Previously for almost five and a half decades there was the Companies act 1956 to regulate the workings of the companies. In the present scenario it has to be abided by the provisions of the new amended act of 2013. the amendment in the act has been brought in order to improve the prevailing legal frame work. Under the new act there is a chapter specified for Compromises, Arrangements and Amalgamations which covers from Section 230-240. The 1956 Act also covered the same topics within the specified section of 391to 396A. There are certain provisions which were not been covered by the old act, but this has been remedied in the amendment. However, there exists differences between these provisions for example
1. As per section 394 of the previous act Inbound Merger was allowed but as per the new act In as well as Outbound merger is also allowed.
2. Transparency in the documents have been increased in the new act, as per the act all the valuation reports of every meeting is to be disclosed to the Central Government and no merger or arrangement can take place without the sanction of the Tribunal.
3. Section 233 of the amended act provides for amalgamation between two or more companies without the approval of the NCLT this provision was not existing in the previous act.
4. For approval of any scheme 3/4th of the value of the creditors or members is required along with the Tribunal, it was done through voting in person or by proxy but now the 2013 act has also included the secret ballot as a method for approval.
There are some other differences between both the acts which can be seen under further elaboration. Here it can clearly be seen that the main objective of the Companies Act 1956 was to setup a legal framework for the easy setting up of companies in the country, however the 2013 Act aims to simplify these objectives but speeding them up.