1. Merger or amalgamation is not defined under Companies Act, 2013. However, as per Income Tax Act, 1961, amalgamation is defined. Absorption and Merger are its types.
2. So, all provisions of amalgamation work here. All property, asset and liability of amalgamating (transferor) company becomes that of amalgamated (transferee) company. Also, shareholders having at least 75% value in amalgamating company become shareholders of amalgamated company.
3. Section 233: Covering fast track merger between various classes of companies such as i) holding with wholly owned subsidiary ii) start-up companies and iii) small companies.
“Small Company” means a company having paid-up share capital up to Rs. 4 crores and turnover up to Rs. 40 crores.
4. After merger, Transferee Company shall not hold any shares in Transferor Company either in its own name or in the name of its trust or in its subsidiary or associate’s name.
5. The Authorized Share Capital of Transferee Company shall increase (due to addition of capital of Transferor Company).
6. NCLT Approval is not needed in case of Fast Track Merger. Only, approval of Registrar of Companies, Regional Director and Official Liquidator is required. However, if RD is of the opinion that NCLT involvement is necessary then only it is involved.
7. Process:
i) Convene Board Meeting and get approval on draft scheme.
ii) File notice of this scheme with ROC & Official Liquidator – Form CAA.9. They can raise suggestion/objection within 30 days.
iii) Then, a declaration of solvency is filed with ROC by both companies – Form CAA. 10.
iv) Thereafter, both companies to convene a general meeting (of shareholders) and creditor’s meeting and take 90% approval.
v) The transferee company shall within 7 days, file copy of the scheme approved by shareholders and creditors with RD – Form CAA. 11.
vi) The scheme shall also be filed to ROC – Form GNL-1.
vii) To the Official Liquidator by hand delivery or post.
viii) If ROC and OL do not give any objection or suggestion within 30 days to RD and RD feels that the scheme is in favor then it issues approval in Form CAA. 12.
ix) The approved scheme shall then be filed with ROC within 30 days in Form INC-28.
x) In case RD does not approve the scheme, it files its objections to National Company Law Tribunal in 13 within 60 days of receipt of scheme.
OPTION 2:
1. Simple transfer of shares of company from existing shareholders to new shareholders.
2. Change in existing Board.
3. Transfer of asset of existing company to new company through Asset Purchase Agreement. Stamp duty and Registration Charges have to be paid.
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