Fast Track Merger or Amalgamation U/s. 233 of Companies Act 2013

Section 233 of Act (erstwhile no corresponding provisions in CA 1956) has been newly notified/inserted on 15th Dec, 2016. It talks about Fast track Merger or Amalgamation b/w between two or more small companies or between a holding company

Gaurav Kumar

Section 233 of Act (erstwhile no corresponding provisions in CA 1956) has been newly notified/inserted on 15th Dec 2016. It talks about Fast track Merger or Amalgamation b/w between two or more small companies or between a holding company and its wholly-owned subsidiaries by giving notice of proposed scheme inviting comment or suggestion by both the transfer and transferee company and Registrar, OL or person (Third Party) affected by the scheme.


Provisions of section 230 to 232 of the Act (erstwhile section 391-394 of the CA 1956) is very time cumbersome (as approximately takes 6 to 8 months) activity, as it includes clearance from many regulatory bodies and all type of companies has to go through such route. Now new provisions of Section 233 of CA 2013 came into force for simple and fast track process of merger or amalgamation of two or more small companies or between a holding company and its wholly-owned subsidiaries.

Notwithstanding the provisions of Section 230 and 232 of the Act under the fast track process Central government has the power to approve such scheme and there is no need to approach to NCLT.

Exclusion of Public Company

Small Company as defined u/s 2(85) of the Act

Note: It excludes “Small Public Company” thus all public companies has to go under the route of Section 230 to 232 of Act.

√ Holding Company as defined u/s 2(46) of the Act

Exclusion of Demerger

As the heading of this Section says Merger or Amalgamation of certain companies means Demerger is not under the purview of this section. Section 233 of the Act does not contain the word “Reconstruction” which is mentioned in Section 232 of Act.

Prohibition of Treasury Stock

Section 233(10) Act prohibits the maintenance of the Treasury Stock. At the time of Merger shares held by Transferee Company in the Transferor Company have to be cancel.

Clubbing of Authorized Capital

Section 233(11) of the Act give legal sanctity to this concept. Fee, if any, paid by the Transferor Company (Amalgamating) on its authorised capital prior to its merger or amalgamation with the transferee company (Amalgamated) shall be set-off against the fees payable by the transferee company on its authorised capital enhanced by the merger or amalgamation.

Shareholder Approval

Section 233 (1), (b) of Act says for approval by shareholders holding at least 90% of the total number of shares and it does not require the majority in number as required by section 230 of Act (erstwhile mentioned in Section 391 of CA 1956 i.e. 3/4th in number). There is an ambiguity on whether it is 90% of shareholder present.

Creditor Approval

Section 233 (1), (b) of Act, says for approval by creditor in majority representing nine-tenths (9/10th) in value of the creditors or class of creditors

In small private companies, creditors are not in large number, so if 90% by value hold by few creditor than it may create a problem in taking approval.

Dispensation from the Meeting

If 90% in value of creditors agree by way of affidavit then meeting of creditors can be dispensed.

There is a no provision of the dispensation of members meeting, unlike creditor meeting. Normally members of the private company are from the same family or small in number from whom to obtain affidavit in writing is not time cumbersome or difficult task.

Not falling under the purview of section 233 of the Act

As per section 233 read with rule 25(6) of the Act where objections or suggestions are received from the ROC or OL and CG is of the opinion that scheme is not in the public interest or in the interest of creditor it may file application to concerned NCLT to requesting to consider the same under section 232 of the Act.

Concerned Companies at their discretion opt to undertake such scheme under section 230 to 232 of the Act, even though their scheme falls under the purview of section 233 of the Act.

Prescribed Forms

CAA.9 Notice of scheme inviting objection or suggestions from concerned authorities Section 233(1)(a) read with Rule 25(1)
CAA.10 Declaration of solvency by both (Transferor and Transferee) the Companies involved in the scheme Section 233(1)(c) read with Rule 25(2)
CAA.11 Notice of approval of the scheme of merger or amalgamation (to be filed by the transferee company to the CG, Registrar and the OL) Section 233(2) read with Rule 25(4)
CAA.12 Confirmation order for the scheme of Merger or Amalgamation Section 233 read with Rule 25(5)


With the advent of this section Merger or Amalgamation became less time cumbersome for certain companies but to some extent concept and intention/purpose of law with regards to Fast track is defeated as there is various clearances or repetitive approval required to take from the regulatory body under section 233 of the Act.

Author: Gaurav Kumar working as Company Secretary in Jaypee Group, for any query or suggestion kindly contact at gaurav.aggarwal002@gmail.com

Categories: Company Law

View Comments (2)

  • Dear author, in respect of shareholder's approval, its is implied for passing any resolution OR or SR for any matter majority is required. only 90% in value can not make criteria for approving the scheme of merger or amalgamation. eg. if 3 members are there and 1 holds 90% value of shares and others have only 10%, then only by approving scheme by one member who holds 90% share can not make scheme approved and resolution passed at GM or Class meeting. so it can be concluded that for approving scheme of merger at gm can be made by majority of members and 90% of value of shares both.
    Thank you,
    Cs Manish Kumar
    FCS Ashok Tyagi (PCS) (Secretarial auditor of jaypee group)
    GK-I Delhi

  • What are the legal compliance after getting
    the order in the form CAA-12 udfer Fast Track Merger section 233 of the Act.

    A live case study will be more useful.



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