In what could kick off a new wave of mergers and acquisitions and open a new frontier in the resolution space, Chennai National Company Law Tribunal has given the green signal to merger of a Limited Liability Partnership with a private company. 

The move, experts say, sets a distinct precedent as the Companies Act, 2013 and the LLP Act, 2008 do not contain any express provisions providing for such cross-entity amalgamation. 

The NCLT held that the intent of these legislations is to facilitate ‘ease of doing business’ and to ‘create a desirable business atmosphere,’ and hence it would be wrong to presume that a merger of an Indian LLP with an Indian company is prohibited. 

“Legislative intent behind enacting both LLP 2008 and Companies Act 2013 is to facilitate the ease of doing business and create a desirable business atmosphere for companies and LLP,“ the bench observed, adding that for this purpose, both the acts have provided provisions for merger or amalgamation of two or more LLPs and companies. 
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“If the intention of the parliament is to permit a foreign LLP to merge with an Indian company then it would be wrong to presume that the act prohibits a merger of an Indian LLP with an Indian company. Thus, there does not appear any express legal bar to allow/sanction merger of an Indian LLP with an Indian company,” it said. 

The decision came in the case of amalgamation petition of Real Image LLP with Qube Cinema Technologies Pvt Ltd. The tribunal has given a forward looking order and it remains to be seen what would be the tax treatment of such an amalgamation. #casansaar (Source - Economic Times)