“Unlock the benefits of Fast Track Merger under Section 233 of the Companies Act, 2013, with a streamlined process completed in just 60 days. Explore the recent MCA notification mandating the time limit and its impact on the merger application filed before the Regional Director. Delve into the steps involved, including board approvals, notice issuance, declaration of solvency, shareholder/creditor meetings, and filing applications. Discover the advantages of this cost-effective and time-bound mechanism, encouraging swift mergers without NCLT involvement. Stay updated on the latest regulations shaping India’s corporate landscape.”
FAST TRACK MERGER
(Section 233 of the Companies Act, 2013)
NEW ERA – SIMPLY FAST WITHIN DEADLINE
Time Line – 60 days – Maximum from the date of Filing Application to the RD
Fast track merger, governed by Section 233 of the Companies Act, 2013, is a streamlined process aimed at expediting the merger of certain classes of companies. It offers a cost-effective solution with shorter timelines and avoids the involvement of the National Company Law Tribunal (NCLT). A recent MCA Notification No. G.S.R 367(E), Dated: 15th May 2023 has mandated a time limit of 60 days for concluding the fast track merger application filed before the Central Government’s Regional Director (RD).
Please refer: MCA Notification No. G.S.R 367(E), Dated: 15th May 2023 – It shall come in to force with effect from 15th day of June, 2023 so the application filed thereafter shall be considered and taken under the said rule.
It is not a new time line but this notification mandated time line of 60 days to conclude the fast track merger application filed before the Central Government (RD).
The process and procedure of Fast Track merger and intent of the government is very clear that unnecessary delay should be avoided, it is a new step to bind the process within definite deadlines.
In case of delays the application shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.
The ROC and OL has been has been allotted 30 days’ time line to revert with objection or suggestion from the receipt of copy of scheme only.
If the Central Government (RD) is of the opinion that the scheme is in the public interest or in the interest of creditors, it may, within a period of 15 days after the expiry of said thirty days, issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12,
In case the Objection or Suggestion has not been received by the ROC/ OL it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.
Where objections or suggestions are received within a period of 30 days and are not sustainable and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, it may within a period of 30 days issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12
But if the Central Government is of the opinion, whether on the basis of such objections or otherwise, that the scheme is not in the public interest or in the interest of creditors, it may within 60 days file an application before the Tribunal in Form No. CAA.13 stating the objections or opinion and requesting that Tribunal may consider the scheme under section 232 of the Act:
| Particulars | Time Line | Actions |
| ROC / OL | 30 days | To submit Objections or Suggestions |
| RD | 30+15 days | No Objections and Suggestions received from the ROC/OL- Confirmation Order CAA-12 |
| RD | 30+30 days | Objections and Suggestions received from the ROC/OL – But not sustainable – Confirmation Order CAA-12 |
| RD | 30+30 days | Objections and Suggestions received from the ROC/OL – sustainable – Application before the Tribunal Form No. CAA.13 |
For Limited Classes of Companies:-
A scheme of merger under section 233 of the Act read with Rule (CAA) 2016 may be entered into between any of the following class of companies, namely:—
(i) Merger between two or more Small Companies;
(ii) Merger between a Holding Company and its Wholly-owned Subsidiary Company
(iii) Two or more start-up companies; or
(iv) One or more start-up company with one or more Small Company;
Explanation: For the purpose of this sub-rule “Start-up Company” means a private company incorporated under the Companies Act, 2013 or Companies Act, 1956 and recognized as such in accordance with Notification number G.S.R. 127 (E), dated 19th February, 2019 issued by the Department for Promotion of Industry and Internal Trade.
“Small Company” means a company other than a public company — U/s 2(85) of the Act: A paid-up share capital equal to or below Rs.4Cr. or such a higher amount specified not exceeding more than Rs.10Cr. A turnover equal to or below Rs.40 Cr. or such a higher amount specified not exceeding more than Rs.100Cr.
This mechanism offers a cost-effective solution, with no involvement of the National Company Law Tribunal (NCLT); no requirement of a special audit; and no administrative formalities, the process does not require any newspaper advertisement or public advertisement announcing the merger.
Steps for filing E forms to complete the process of Fast Track Merger:
| Form No | By Whom | Particulars |
| GNL-1 | Transferor & Transferee Company | The notice inviting objection from ROCs in form CAA 9 |
| GNL- 2 | Transferor & Transferee Company | The Declaration of Solvency in Form CAA 10 |
| MGT-14 | Transferor & Transferee Company | Board resolution and Special resolution passed for approving the scheme |
| GNL-1 | Transferee Company | Filing of scheme and Form CAA11 with the Regional Director |
| RD-1 | Transferee Company | Report ofmeeting in Form CAA 11 |
| INC-28 | Transferor & Transferee Company | Confirmation order to be filed with ROCs. |
1. Board Approval of the Scheme: The draft scheme requires approval of Board of Directors of both companies. 90% of shareholders (in number) and 90% of creditors (in value).
2. A notice of the proposed Scheme shall be sent by both the Transferor and Transferee Companies to the Registrar of Companies (RoC) and Official Liquidator (OL) where the Registered office of the respective companies are situated or persons affected by the Scheme, inviting their objections or suggestions on the proposed Scheme. The said Notice shall be in in Form CAA-9. Within 30 days of the issue of the notice of the proposed Scheme, the RoC and OL shall provide their objections and suggestions, if any.
3. Filing of Declaration of Solvency by by both the Transferor and Transferee Companies to the Registrar of Companies (RoC)
4. Shareholders Meeting /Creditors Meeting – with 21 days’ Notice.
5. Filing of Application with Regional Director Copy to ROC, OL within 7days post meeting of the Shareholders/ Creditors.
6. Report by the ROC / OL within 30 days.
7. Order from RD within 15 days (if report has not been issued by the ROC/ OL) or 30 days (if it has been issued and good to go or if there is any objection from RD-it shall be referred to the NCLT) – Thus total 60 days only.
Conclusion: The introduction of a 60-day timeline for fast track mergers through the MCA notification is a significant step towards ensuring the timely completion of merger applications. By imposing strict deadlines, the government aims to prevent unnecessary delays and enhance the efficiency of the merger process. This time-bound approach encourages companies to swiftly file their applications and facilitates a faster resolution of objections and suggestions. The fast track merger mechanism, particularly for limited classes of companies, offers a simplified procedure without the involvement of NCLT and administrative formalities. It provides a cost-effective and expedited solution for companies seeking to merge, promoting ease of doing business in India’s corporate landscape.
Author Bio
Provisions of Section 233 is applicable to Fast Track Demerger also as per the Section 233(12) of the Companies Act. Therefore, will this notification also be applicable to Fast Track Demerger. Please confirm.