Today, Here I will discuss the emerging and upfront topic of The Companies Act, 2013‘MERGER’. So, let us go through each aspect of the merger i.e, from meaning, categories, to checklist & whole procedure.

What Is a Merger?

A merger is an agreement that unites two existing companies into one new company. There are several types of mergers and also several reasons why companies complete mergers. Mergers & Acquisitions are commonly done to expand a company’s reach, expand into new segments, or gain market share. All of these are done to increase shareholder value.

A merger is the voluntary fusion of two companies on broadly equal terms into a new legal entity.

text on gray word merger in small wooden letters with black font on a blue background

Types Of Mergers

There are five basic categories or types of mergers:

1. Horizontal merger: A merger between companies that are in direct competition with each other in terms of product lines and markets. A horizontal merger takes place when two companies offering similar, or compatible, products or services to the same market combine under single ownership.

2. Vertical merger: A merger between companies that are along the same supply chain (e.g., a retail company in the auto parts industry merges with a company that supplies raw materials for auto parts. A vertical merger (also called vertical integration) is a merger between a manufacturer and a supplier. This is different from a horizontal merger between two companies that manufacture similar products.

3. Market-extension merger: A merger between companies in different markets that sell similar products or services. Typically, market extension mergers involve two companies which operate in different geographic regions. The main purpose of the market extension merger is to make sure that the merging companies can get access to a bigger market and that ensures a bigger client base.

4. Product-extension merger: A merger between companies in the same markets that sell different but related products or services. The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers. This ensures that they earn higher profits.

5. Conglomerate merger: A merger between companies in unrelated business activities (e.g., a  clothing company buys a software company).  Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.

Persons Eligible For Filing The Petition Before NCLT

1. An application for merger & amalgamation shall be filed with Tribunal (NCLT) by both which are below mentioned:-

The transferor(s) Company

The transferee company

In the form of the petition under section 230-232 of the Companies Act, 2013 for the purpose of sanctioning the scheme of Merger.

2. Where more than one company is involved in a scheme, such application may, at the discretion of such companies, be filed as a joint-application.

In case, the registered office of the companies involved is in different states, there will be two Tribunals having jurisdiction over those or Both the companies shall have to file a separate petition with the respective Tribunals.


Check memorandum whether authorizes Merger or not, if not so, firstly amend the Object clause
Checklist 2  Drafting of Scheme
 The Scheme of amalgamation would comprise of various parts containing details about Transferor Company,
Transferee Company. The Scheme, in particular, would comprise of the following in detail:
Introductory Part
(A) Basic Details of the Transferor & Transferee company like date of incorporation, CIN and registered office and address for service of notice
(B) Main objects in Memorandum of Association of Transferor and Transferee Company
(C ) Jurisdiction of the Bench/Limitation /Definition Clause
(D) Facts of the case – reason in brief for going into merger or amalgamation
(E) Nature of business/Share Capital of the companies involved and the shareholding relationship between the companies
Operating Part – The scheme
(A) Appointed Date/Transfer of the undertaking
(B) Transfer of assets, debts and liabilities, licenses, approvals/permissions, Company’s staff, workmen and employees, contracts of transferor Company
(C )  Enforcement of contracts, deeds, bonds and other instruments,  Legal Proceedings
(D) Issue and Allotment of Shares under the Scheme and Accounting Treatment etc
Prayer / Relief Part
(A) Approval of scheme
(B) Particulars of Bank draft evidencing payment of a fee for the Application
Checklist 3 Obtaining the approval of the Board of Directors of the companies involved
Approval of the Board of Directors
(A) Approval of the scheme of amalgamation by the Board of both the companies.
(B) Board resolution should, besides approving the scheme, authorize a Director/Company Secretary/other officers to make an application to Tribunal
(C ) Appointment of an Independent Registered Valuer for valuing shares to determine the share exchange ratio
Checklist 4 Obtaining approval of the stock exchanges in case of listed companies
(A) A listed entity desirous of undertaking a scheme of arrangement or involved in a scheme of the arrangement,
(B) It shall file the draft scheme of the arrangement, proposed to be filed before Tribunal with the stock exchange(s).
(C )  To get, In principle approval by stock exchanges
Checklist 5 Application / Petition for convening the meeting of members/creditors shall be filed with National Company Law Tribunal
(A) Petition to the Tribunal for merger & amalgamation shall be submitted in Form No. NCLT-1 along with following documents:
Notice of admission in Form No. NCLT-2
An affidavit in Form No. NCLT-6
A copy of Scheme of compromise and arrangement (Merger)
 latest financial position, latest auditors report, and pendency of any investigation or proceedings.
Reduction of the share capital of the Company, if any.
 Any scheme of corporate debt restructuring (CDR) if any
(B) NCLT hearing and order
The Tribunal upon hearing the application may either give relevant directions/order for conducting the meeting of the creditors or class of creditors or of the members or class of members
may dismiss the application for any appropriate reason.
Checklist 6 Convening meetings of the Shareholders and Creditors and obtaining their consent on Scheme
Members’ and creditors’ approval to the scheme of merger and This approval is to be obtained at specially convened meetings held as per Tribunal’s directions
However, the Tribunal may dispense with meetings of members/creditors [Section 230(9)].
The scheme of compromise or arrangement has to be approved as directed by the Tribunal, by
(A) the members of the company; or
(B) he members of each class, if the company has different classes of shares; and
(C )  the creditors; or
(D) each class of creditors, if the company has different classes of creditors
(A) Draft Notice
An explanatory statement under Section 230 of the Companies Act, 2013 and form of proxy are required to be filed.
settled by the concerned Tribunal before they can be printed and dispatched to the shareholders.
The notice should be in Form No. CAA-2 of the said Rules and must be sent by the person authorized by the Tribunal in this behalf.
(B) Notice by advertisement
Notices are required to be given in the prescribed Form
Published once in an English newspaper and once in the regional language of the State in which the registered office of the company is situated.
(C) chairman confirmation
The Chairman appointed by the Tribunal has to file an affidavit at least 7 days before the meeting.
In which, he confirmed that the direction relating to the issue of notices and the advertisement has been duly complied with, as required under Rule 12 of the said Rules.
(D) Convening of General Meeting
At the General Meeting convened by the Tribunal, the resolution will be passed approving the scheme of Merger.
Following points of difference relating to the holding and conducting of the meeting convened by the Tribunal may be noted:
1 Proxies are counted for the purpose of quorum
2 Proxies are allowed to speak;
3 The vote must be put on the poll or by voting through electronic means [Rule 13 of the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016].
(E) Reporting of the Results
The chairman of the meeting will submit a report of the meeting indicating the results to the concerned Tribunal in Form No.CAA-4
within the time fixed by the Tribunal, or where no time has been fixed, within three days after the conclusion of the meeting
The Report must state accurately:
1 The number of creditors or class of creditors or the number of members or class of members, as the case may be, who were present/ voted at the meeting  either in person or by proxy
2 their individual values; and
3 the way they voted.
Checklist 7 Approvals or No objection from Regional Director / Official Liquidator and others
(A) Approval from the RD and official liquidator
(B) Approval of Financial Institutions
(C ) Approval from the Land Holders
(D) Approval of Reserve Bank of India: Where the scheme of amalgamation envisages issue of shares/cash option to NonResident Indians
(E) Approvals from Competition Commission of India (CCI)
Checklist 8 Filing of a final petition with NCLT for approving the Scheme
(A) The petition must be made by the company and if the company is in liquidation, by the liquidator, within seven days of the filing of the report by the chairman.
(B) The petition is required to be made in Form No. CAA-5 of the said rules.
(C ) A notice of the hearing shall be published in the same newspapers in which the notice of the meeting was advertised, not less than 10 days before the date fixed for hearing (Rule 16)
(D) An order of the Tribunal on summons for directions should be obtained which will be in Form No. CAA. 6 (Refer Rule 17).
Checklist 9 Obtaining order for approval for scheme of merger/amalgamation from the National Company Law Tribunal and inform ROC
NCLT may sanction the Scheme or not:
but if sanction by NCLT so filed below documents:-
(A) A certified copy of the order passed by the Tribunal is required to be filed with the concerned Registrar of Companies.
(B) This is required to be filed with INC-28 as prescribed in the Companies Act, 2013 within a period of 30 days of the receipt of the order
If not sanction by NCLT – File an appeal to NCLAT

Forms Involved: 

NCLT-1: Application to NCLT

NCLT-2: A notice of admission

NCLT-6:  Affidavit verifying Petition

CAA-2: Notice and advertisement to notice

CAA-3: Notice to Government Regulatory authorities

CAA-4: Result of  a report of the meeting by the chairperson

CAA-5: Petition to sanction Merger

CAA-6: Order of petition

CAA-8: Statement to be filled with ROC

INC-28: Notice of Order of the court

(If This Article Is Helpful For You So, Please Mentioned Your Valuable Comments And Suggestions And You Can Ask Any Query Regarding The Same.)

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  1. shorya says:

    besides these, is there any stock exchange compliance or LODR compliance that need to be done by a private listed company ( whose debentures are only listed)

  2. Pavan Kumar says:

    The scheme of Amalgamation is submitted only to the Hon’ble NCLT? Before NCLT is there any authority to whom the scheme must be filed like ROC or OL? Please update me over this issue.

    Thank You,

    M Pavan Kumar.

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April 2021