This article explains the requirement for Central Government approval for demergers in eligible government companies, superseding NCLT approval.
Approval for Government Company Demerger: NCLT vs Central Government
The article clarifies the necessity for Central Government approval for demergers involving eligible government companies, as per Sections 230 to 232 of the Companies Act. Following a 2017 MCA notification, approval from the NCLT is no longer required in such instances.
This development reflects a shift in regulatory oversight for demergers within government entities, streamlining procedures by vesting the authority solely with the Central Government. It highlights the government's role in overseeing significant structural changes within its enterprises.
Practitioners should be aware of these procedural changes when advising clients on potential corporate restructuring involving government companies, ensuring compliance with framework established by the Companies Act.
Citations
- None
