Procedure for Merger through NCLT

a) between a company and its creditors or any class of them; or

b) between a company and its members or any class of them,

the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs.

Application for order of meeting

I. A notice of admission in Form No. NCLT-2

II. An affidavit in Form No. NCLT-6 (Verifying of Petition)

III. A copy of scheme of compromise or arrangement, which should include the following disclosures as per Section 230(2) (Annexure A):

a) All material facts relating to the company, such as the latest financial position of the company, the latest auditor’s report on the accounts of the company and the pendency of any investigation or proceedings against the company;

b)  Reduction of share capital of the company, if any, included in the amalgamation;

c) Any scheme of corporate debt restructuring consented to by not less than seventy-five per cent of the secured creditors in value, including—

i. A creditor’s responsibility statement in Form No. CAA. 1;(As per rule 4 (Disclosures in application made to the Tribunal for compromise or arrangement) of Compromise, Arrangements and Amalgamations, 2016

ii. Safeguards for the protection of other secured and unsecured creditors;

iii. Report by the auditor that the fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based upon the estimates provided to them by the Board

iv. where the company proposes to adopt the corporate debt restructuring guidelines specified by the Reserve Bank of India, a statement to that effect; and

v. a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer.

IV. Fee as prescribed in the Schedule of Fees

2. Where more than one company is involved in a scheme in relation to which an application under sub-rule (1) is being filed, such application may, at the discretion of such companies, be filed as joint-application.

3. Where the company is not the applicant, a copy of the notice of admission and of the affidavit shall be served on the company, or, where the company is being wound up, on its liquidator, not less than fourteen days before the date fixed for the hearing of the notice of admission.

4. The applicant shall also disclose to the Tribunal in the application under sub-rule (1), the basis on which each class of members or creditors has been identified for the purposes of approval of the scheme.

5. A member of the company shall make an application for arrangement, for the purpose of takeover offer in terms of sub-section (11) of section 230, when such member along with any other member holds not less than three-fourths of the shares in the company, and such application has been filed for acquiring any part of the remaining shares of the company.

Directions at hearing of the application

a) Determining the class or classes of creditors or of members whose meeting or meetings have to be held for considering the proposed compromise or arrangement;

b) Fixing the time and place of the meeting or meetings;

c) Appointing a Chairperson and scrutinizer for the meeting or meetings to be held, as the case may be and fixing the terms of his appointment including remuneration;

d) Fixing the quorum and the procedure to be followed at the meeting or meetings, including voting in person or by proxy or by postal ballot or by voting through electronic means;

e) Determining the values of the creditors or the members, or the creditors or members of any class, as the case may be, whose meetings have to be held;

f) Notice to be given of the meeting or meetings and the advertisement of such notice;

g) notice to be given to sectoral regulators or authorities as required under sub-section (5) of section 230;

h) The time within which the chairperson of the meeting is required to report the result of the meeting to the Tribunal; and

i) Such other matters as the Tribunal may deem necessary.

Notice of Meeting

2. The notice shall be sent by the chairperson appointed for the meeting, or, if the Tribunal so directs, by the company (or its liquidator), or any other person as the Tribunal may direct, by registered post or speed post or by courier or by e-mail or by hand delivery or any other mode as directed by the Tribunal to their last known address at least one month before the date fixed for the meeting.

3. The notice of the meeting to the creditors and members shall be accompanied by a copy of the scheme of compromise or arrangement, if such details are not already included in the said scheme:-

i. Details of the order of the Tribunal directing the calling, convening and conducting of the meeting;

a) Date of the Order

b) Date, Time and Venue of the Meeting

ii. details of the company including:

a) Corporate Identification Number (CIN) or Global Location Number (GLN) of the company;

b) Permanent Account Number (PAN)

c) name of the company;

d) date of incorporation;

e) type of the company (whether public or private or one-person company);

f) registered office address and e-mail address;

g) summary of main object as per the memorandum of association; and main business carried on by the company;

h) details of change of name, registered office and objects of the company during the last five years;

i)  name of the stock exchange (s) where securities of the company are listed, if applicable;

j) details of the capital structure of the company including authorized, issued, subscribed and paid up share capital; and

k) name of the promoters and directors along with their addresses.

iii.  if the scheme of compromise or arrangement relates to more than one company, the fact and details of any relationship subsisting between such companies who are parties to such scheme of compromise or arrangement, including holding, subsidiary or of associate companies.

iv. the date of the Board meeting at which the scheme was approved by the Board of directors including the name of the directors who voted in favour of the resolution, who voted against the resolution and who did not vote/ participate on such resolution;

v. explanatory statement disclosing details of the scheme of compromise or arrangement including:

a) parties involved in such compromise or arrangement;

b) in case of amalgamation or merger, appointed date, effective date, share exchange ratio (if applicable) and other considerations, if any;

c) summary of valuation report (if applicable) including basis of valuation and fairness opinion of the registered valuer, if any; and the declaration that the valuation reports is available for inspection at the registered office of the company;

d) details of capital/debt restructuring, if any;

e) rationale for the compromise or arrangement;

f) benefits of the compromise or arrangement as perceived by the Board of directors to the company, members, creditors and others (as applicable);

g) amount due to unsecured creditors.

vi. disclosure about the effect of the compromise or arrangement on:

a) key managerial personnel;

b) directors;

c) promoters;

d) non-promoter members;

e) depositors;

f) creditors;

g) debenture holders;

h) deposit trustee and debenture trustee;

i) employee of the company

vii. Disclosure about effect of compromise or arrangement on material interests or directors, Key Managerial Personnel (KMP) and debenture trustee.

viii. investigation or proceedings, if any, pending against the company under the Act.

ix. details of the availability of the following documents for obtaining extract from or for making/obtaining copies of or for inspection by the members and creditors, namely:

a) latest audited financial statements of the company including consolidated financial statements;

b) copy of the order of Tribunal in pursuance of which the meeting is to be convened or has been dispensed with;

c) copy of scheme of compromise or arrangement;

d) contracts or agreements material to the compromise or arrangement;

e) the certificate issued by Auditor of the company to the effect that the accounting treatment if any proposed in the scheme of compromise or arrangement is in conformity with the Accounting standards prescribed under section 133 of the Companies Act, 2013 and

f) such other information or documents as the Board or Management believes necessary and relevant for making decision for or against the scheme;

x. details of approvals, sanctions or no-objection(s), if any, form regulatory or any other government authorities required, received or pending for the purpose scheme of compromise or arrangement.

xi. a statement to the effect that the persons to whom the notice is sent may vote in the meeting either in person or by proxies, or where applicable, by voting through electronics means.

Advertisement of the notice of the meeting

Provide that where separate meetings of classes of creditors or members are to be held, a joint advertisement for such meetings may be given.

Notice to Statutory Authorities

i. the Central Government, the Registrar of Companies, the Income-tax authorities, in all cases;

ii. the Reserve Bank of India, the Securities and Exchange Board of India, the competition commission of India, and the stock exchanges, as may be applicable;

iii. other sectoral regulators or authorities, as required by Tribunal.

2. The notice of the authorities mentioned in sub-rule (1) shall be sent forthwith, after the notice is sent to the members or creditors of the company, by registered post or by speed post or by courier or by hand delivery at the office of the authority.

3. It the authorities referred to under sub-rule (1) desire to make any representation under sub-section (5) of the section 230, the same shall be sent to the Tribunal within a period of thirty days from the date of receipt of such notice and copy of such representation shall simultaneously be sent to the concerned companies and in case of representation is received within the stated period of thirty days by the Tribunal, it shall be presumed that the authorities have no representation to make on the proposed scheme of compromise or arrangement.

Affidavit of Service

2. In case of default under sub rule (1), the application along with copy of the last order issued shall be posted the tribunal for such orders as it may think fit to make.

Result of the meeting to be decided by voting

2. The report of the result of the meeting under sub rule (1) shall be in form no CAA.4 and shall state accurately the number of creditors or class of creditors, as the case maybe, who were present and who voted at the meeting either in person or by proxy, and where  applicable, who voted through electronics means, their individual values and the way they voted.

Report of the result of the meeting by chairperson

Petition for confirming compromise or arrangement

3. Where the company fails to present the petition for confirmation of the compromise or arrangement as aforesaid, it shall be open to any creditor or member as the case may be, with the leave of the tribunal, to present the petition and the company shall be liable for the cost thereof.

Date and notice of hearing

2. The notice of the hearing of the petition shall also be served by the Tribunal to the objectors or to their representatives under section 230(4) (Annexure D) of the Act:

A notice under sub-section (3)shall provide that the persons to whom the notice is sent may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice:

Provided that any objection to the compromise or arrangement shall be made only by persons holding not less than ten per cent. of the shareholding or having outstanding debt amounting to not less than five per cent. of the total outstanding debt as per the latest audited financial statement.

and to the central government and other authorities who have made representation under rule 8 and have desired to be heard in their representation.

Order on petition

2. The order shall direct that a certified copy of the same shall be filed with the registrar of companies within thirty days from the date of the receipt of copy of the order, or such other time as maybe fixed by the tribunal.

3. The order shall be in Form No. CAA. 6, with such variations as may be necessary.