Mergers, amalgamations, compromises, arrangements are various forms of corporate restructuring in the corporate world. All these activities are administered by different regulations in different nations. Corporate restructuring is a collective term for a variety of different business affairs. Restructuring can be in the form of restructuring or restoration. Corporate restructuring can be either organic or inorganic. Restructuring or changes done within the organization are organic or internal in nature. It can be either operational, financial, or managerial. Whereas, restructuring or changes introduced with the help of external powers is known as inorganic or external restructuring. Compromises, mergers, or acquisitions are kind of inorganic corporate restructuring.

The companies involved in reconstruction are required to take approval from several regulatory authorities and considering various issues involved in mergers and acquisitions, it becomes difficult to get approval under every regulation. Corporate restructuring might result in a change in share capital or capital structure, change of shareholders, change of control, removal of a minority, change of business, change of operating entities, etc. Restructure is necessary if a company wants to grow itself and must be done within its corporate lifetime. The Ministry of Corporate Affairs in its recent circular has announced an amendment to the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 by way of the Companies (Compromises, Arrangements, and Amalgamations) Amendment Rules, 2021, which drives the mergers, acquisition, and amalgamation of companies. The key points of the notification are discussed below.

A) Compromises, Arrangements, and Amalgamations: An amendment has been given to Rule 25 of the Amalgamation Rules to implement that two or more start-up companies or one or more start-up company with one or more small company can enter into a scheme of merger or amalgamation under the Companies Act, 2013. Provided, that the term start-up company shall mean a private company incorporated under the Act or the Companies Act, 1956.

B) Specification of Definitions Details: An amendment has been made to rule 2 of the Definitions Rules to state that for the purposes of section 2(85) (small company) of the Act, the paid-up capital and turnover of the company must not exceed Rs. 2 crores and Rs. 20 crores respectively.

C) Incorporation: The below amendments have been done to the Incorporation Rules:

• Earlier, as per rule 3 of the Incorporation Rules, one-person companies (OPC) could only be incorporated by an Indian citizen who is resident in India. The same has not been amended to provide that an Indian citizen, whether resident in India or not can incorporate a one-person company. Also, the timeline for determining whether a person is resident in India has been reduced from 182 days to 120 days during the immediately preceding financial year;
• Rule 6 of the Incorporation Rules have been amended to provide a one-person company can be converted into a private company or a public company after increasing the minimum number of members to two or seven, increasing the minimum number of directors to two or three, maintaining the minimum paid-up capital as per the requirements.

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