Summary:Section 233, along with Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, outlines changes to the fast-track merger process. The procedural update mandates that notices to invite objections from the Registrar, Official Liquidator, or other affected parties must now be in Form CAA 9. Additionally, companies regulated by bodies like the RBI, SEBI, or IRDAI must also issue notices to these respective authorities. The eligibility criteria for the fast-track merger route have been expanded to include several new categories of companies. This now covers mergers between two or more start-ups, a start-up and a small company, or two unlisted companies (excluding Section 8 companies) that meet specific financial conditions—namely, aggregate outstanding loans, debentures, or deposits of no more than ₹200 crore with no repayment defaults. Furthermore, the route is now available for mergers between a holding company and its subsidiary (both listed or unlisted), a holding company’s subsidiary with another subsidiary of the same holding company (where transferor companies are unlisted), and the merger of a foreign transferor company with its wholly-owned Indian subsidiary. The rules also apply to schemes for the division or transfer of undertakings. An auditor’s certificate confirming these eligibility conditions must be filed in Form CAA 10A.
Section and rule: Section 233 read with rule 25 of Companies (Compromises, Arrangements and Amalgamations) Rule, 2016.
1.Procedural Change:
Notice to invite objections or suggestions from the registrar or official liquidator or any person affected by the scheme shall be in FORM no.CAA 9.
Notice shall be issued to other authorities like RBI, SEBI, IRDAI by such companies which are regulated by such regulators.
2. Expansion of class of companies Eligible under Section 233 ( Fast Track Merger Route):
1.Two or more startup companies or;
2. One or more Startup with one or more small companies or;
3. One or more unlisted company ( Expect Section 8 Company) with one or more unlisted company ( expect Section 8 company) Subject to:
4. Aggregate of outstanding loans, debentures, or deposits not exceeding 200 Crore rupees;
5. Has no default in repayment of loans, debentures or deposits referred above.
Both as on date not 30 days before the date of notice as per Section 233(1) (a) (i.e Form CAA 09) and on the date of filing of scheme with Form CAA 11 in GNL 01 as per section 233 (2).
Certificate by auditor of the company confirming eligibility conditions as mentioned in the FORM CAA 10 A shall be filed.
One holding company (listed or unlisted) and a subsidiary company ( listed and unlisted)
(Note: Shall not apply when the transferor company or companies are not listed)
1.One or more subsidiary company of a holding company with one or more subsidiary company of the same holding company where the transferor company are not listed)
2. Merger of a foreign transferor company with a wholly owned Indian company ( transferee) of that foreign transferor company is permitted under this route.
3. Schemes of Division or Transfer of Undertakings:
The provisions of this rule apply mutatis mutandis to a scheme of division or transfer of undertaking under Section 232(1) (b).
Source: G.S.R 603(E) Companies (Compromises, Arrangements and Amalgamations) Rules, 2016
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