Summary: The fast track merger process under Section 233 of the Companies Act, 2013, allows mergers between small companies, start-ups, or holding and subsidiary companies with fewer regulatory requirements. To qualify, small companies must have a paid-up capital of less than ₹4 crore and a turnover of less than ₹40 crore, while start-ups must be under 10 years old and have a turnover under ₹100 crore. The process begins with reviewing the Memorandum of Association (MOA) for merger compatibility, followed by board approval and submission of the proposed scheme to the Registrar of Companies (ROC) and official liquidator. A declaration of solvency is filed, and shareholder and creditor approvals are sought with 90% support required. The scheme is then submitted to the Central Government and ROC. If there are objections, the Central Government may refer the scheme to the National Company Law Tribunal (NCLT) for approval. The entire process involves multiple steps, including filing various forms such as CAA-9, CAA-10, and CAA-11. Important timelines include board meetings within 7 days, ROC submissions within 30 days, and shareholder/creditor meetings with 21 days’ notice. The total duration of the fast track merger process can take up to 206 days, depending on the circumstances.
-Eligibility: Section-233 of the companies act, 2013 read with Rule-25(1)(1A) of the Companies (CAA) Rules, 2016
a) Between 2 or more small company
b) Between 2 or more start-ups
c) Between Holding company & it’s WOS
d) Between 1 or more small company with 1 or more start-ups
-Small company:- {SECTION-2 (85) OF THE COMPANIES ACT, 2013) (Notification no: CG-DL-E-15092022-238857}
a) Not a Public company
b) Paid up not exceed 4 Crore. Rupee
c) Turnover not exceed 40 Crore. Rupee
Except,
> Holding company & it’s Subsidiary
> Section-8 Company> Company or body corporate governed under special act
-Start-up company:-
a) Private company not been incorporated 10 years ago
b) Turnover not exceed 100 Crore. Rupee
c) It satisfies any of the following conditions:
> It is working towards: Innovation of new products/processes/services or Development of new products/processes/services or Improvement of existing products/processes/services
> It is a scalable business model with a high potential of: Employment generation or Wealth creation.
-Pursuant to section 233 of the companies act,2013 read with Rule 25 of Companies(Compromise, Arrangements and Amalgamations) Rules,2016
1. Step 1:- Check MOA of Both company whether it allows to merge or not and object of another company is allowed to the another company or not
2. Step 2:- Hold Board meeting and pass BR to approve the merger & prepare proposed scheme of merger & approve it.
3. Step 3:– Send proposed scheme of merger to ROC & Official liquidator in Form CAA-9 & they shall send objections if any within 30 days of receipt of scheme
4. Step 4:– File declaration of solvency to ROC in CAA-10 by both companies.
5. Step 5:– Consider objections received from ROC/OL if any, and send a notice to all the shareholders of the company at least 21 days before the meeting and get approval of at least 90% shareholders in value.
6. Step 6:- Send notice to all creditors of the company at least 21 days before the meeting and get approval of at least 90 %creditors in value.
7. Step 7:– Transferee Company shall within 7 days of conclusion of meeting of creditor or member file copy of scheme and result of meeting in Form CAA-11 to Central Government & Official Liquidator.
8. Step 8:– File form CAA-11 & GNL-1 to ROC.
9. Step 9:– Central Government will ask to ROC that if there is any objection or not which ROC has to reply in 30 days.
10. Step 10:– If ROC gives any objections and Central Government is at the opinion that there is objection in the scheme then CG shall communicate to NCLT in CAA-13 within 60 days of receipt of objection from ROC.
> If NCLT is at the opinion that scheme shall not go with section 233 and have to follow procedure given in section-230.
- If NCLT does not have any objection then it shall approve the scheme in Form CAA-12
Step 11:– Once the scheme has been approved by the Central Government then company shall file Form INC 28 to ROC in 30 days of approval of scheme.
-IMPORTANT FORMS:
1. CAA 9:- Copy of proposed scheme
2. CAA 10:- Declaration of solvency
3. CAA 11:- Copy of approved scheme to CG & OL
4. CAA 12:- Approval of scheme by CG
5. CAA 13:- Objection by CG to NCLT
6. GNL 1:- Copy of approved scheme to ROC
7. INC 28:- Intimation to ROC about approval of scheme
Important timeliness
- 7 days: Board meeting
- 30 days: proposed scheme to ROC
- 21 days: Member’s meeting
- 21 days : creditors meeting
- 7 days : Approved scheme to ROC,CG & OL
- 30 days: Objection by ROC
- 60 days : Objection by CG
- 30 days: INC-28 to ROC
Total: 206 days
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