Section 237 of the Companies Act, 2013
Section 237 of the Companies Act, 2013 deals with the power of the Central Government to provide for the amalgamation of companies in the public interest.
🔹 Section 237 – Power of Central Government to Provide for Amalgamation in Public Interest
This section enables the Central Government to compulsorily amalgamate two or more companies, if it believes such amalgamation is necessary in the public interest.
✅ Key Provisions:
📌 1. Central Government's Authority:
The Central Government may, by order, direct amalgamation of two or more companies into:
A single company, or
A new company
✅ Condition: The government must form an opinion that such amalgamation is essential in the public interest.
📜 2. Order Must Include:
The amalgamation order shall include:
Constitution of the new/transferee company
Date of formation
Share capital structure
Transfer of undertakings, properties, and liabilities
Continuation of legal proceedings
Employees' status and rights
Any other terms and conditions as may be necessary
📢 3. Notification and Representation:
A copy of the order must be laid before each House of Parliament.
The companies concerned must be given an opportunity of being heard before the final order is passed.
💰 4. Compensation to Shareholders:
Shareholders who do not agree with the amalgamation are entitled to compensation.
The amount and manner of payment are determined by a Prescribed Authority (usually a government-appointed body or tribunal).
🧾 Example Use Case:
This section is rarely used but may apply when:
The government intends to protect public interest by merging two weak public sector companies.
Or during crises (e.g., preventing collapse of major financial institutions).
⚖️ Key Difference from Normal Amalgamation:
Unlike Sections 230-232 (which involve Tribunal-ordered mergers), Section 237 is a government-initiated compulsory merger in the public interest.
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