In any scheme of Mergers or Demergers, the definition of Appointed date and Effective date play a very crucial role. In this article, we try to unveil the various aspects and implications of the same under various laws.

Normally appointed date is before effective date. It is sometimes ideal to have both on the same date from commercial angle particularly in the case of demerger.

As per Companies Act 2013

Section 232 (6)“The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date”

It is clear from the above that Appointed date shall be agreed between the parties and specified in the respective scheme of Amalgamation and the appointed date shall be the effective date for transfer of assets and liabilities of the Transferor company to the Transferee company and such transfer shall be effective from the such appointed date and not any subsequent date.

Effective date is the last of the dates by which the Company in relation to which the order is made shall file a certified copy of order with the Registrar of Companies and all other required statutory authorities if any. As per Section 232(5) The order is to be filed within 30 days of the receipt of the certified copy of order. When the order has so filed, the amalgamation or arrangement becomes effective or having come into force from the ‘Appointed Date’.

Q. What are the Significance of appointed date and effective date?

Q. In which laws appointed date and effective date are defined?

Q. Which date should come first from execution point of view? Can appointed date be after the effective date?

Q. Can both the dates be same? When is it advisable to keep the dates same?

Q. Can the effective date be some other date specified by the management after NCLT order is filed with ROC? When comes the Record date?

Q. Which one is the effective date- when transferee company files the order or when transferor company files?

Q. Can appointed date be any date in the middle of the financial year of the transferor/demerged company? What are the implications (+ and -)?

Q. Can appointed date be very far in earlier years? For example, suppose that the company has filed the application in the middle of FY 2007-08, then can appointed date be 01st April 2004 or so?

Q. Is it necessary to mention appointed date and effective date in the scheme? If it is not mentioned in the scheme then what are the implications?

Q. Can there be more than one appointed date/Effective Date? If yes then, what will be the implications of the varying dates?

Q. Can appointed date be changed- after the scheme is sanctioned- after e form INC 28 is filed?

Given below are examples from some schemes and the stated definitions from schemes.

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