Article explains Steps of Fast Track Merger Under Section 233 of Companies Act, 2013 read with Rule 25 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
Steps of Fast Track Merger Under Companies Act, 2013
| Points | Particulars | Forms and Time lines |
| Sections Applicable | Section 233 of Companies Act, 2013 and Rule 25 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 | – |
| Authorities | Regional Directors, Registrar of Companies (RoC) and Official Liquidator | – |
| Applicability | Mergers between “Small Company” under Section 2(85) of the Companies Act, 2013 and Holding Subsidiary Companies.
Small company means company other than Public Company- i) Paid-up share capital does not exceed 50 lakh rupees and ii) Turnover does not exceed 2 crore rupees |
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| To Check Articles of Association of Company | To assess whether the companies have proper authorities under AOA to enter into merger.
If such authority is absent then alter AOA. |
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| Draft Scheme | To prepare draft scheme to be placed in Board Meeting for approval.
Points to be covered under the scheme: – Basic details of Transferor and Transferee Companies – Main objects as per MOA of both Companies – Jurisdiction – Limitation – Facts of the case – Definition – Pre and Post merger share capital – Transfer and vesting of Assets and Liabilities – Appointed date of the Scheme – Accounting Treatment – Company Staff, Workmen and Employees their benefits – Legal Proceedings – Cancellation of the shares of the transferor company – Consolidation of Authorised Share Capital – Dissolution without Winding Up |
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| Convene Board Meeting | – Approval of Scheme
– Fix date and time for shareholders and creditors meeting. |
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| Notice of Proposed Scheme | The transferor and transferee companies both shall file notice of the proposed scheme with the Registrar where registered offices of both the companies are situated and Official Liquidator for inviting objections/ suggestions, if any, from the respective registrars within 30 days of the issue of Notice | Notice inviting objection in Form CAA 9 is to be filed in E-Form GNL-1 |
| Attachments with CAA 9 | – Copy of scheme
– Board resolution |
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| Declaration of Solvency | Both the companies shall file declaration of solvency before the meeting of members and creditors.
The same shall be accompanied by the Board resolution, statement of Assets and Liabilities and Auditors Report. |
CAA 10 in Form
GNL – 2 |
| Convening Meeting of Members or class of Members by both Companies | The notice should contain
– Statement disclosing details of merger – Copy of Valuation report – Copy of Scheme – Copy of Declaration of Solvency The objections/suggestions received by the company from the registrar would be discussed and voted upon in this meeting. |
Notice to be sent 21 clear days prior to meeting |
| Convening meeting of Creditors and Class of Creditors by both Companies | The notice should contain
– Statement disclosing details of merger – Copy of Scheme – Copy of Declaration of Solvency The scheme is to be approved by a majority that is 9/10th in value of the creditors or class of creditors of the respective companies. |
Notice to be sent 21 clear days prior to meeting |
| Filing of MGT 14 | Both the Transferor and Transferee Companies shall file the special resolution as approved by the members and creditors. | Within 30 days of passing of Special resolution |
| Filing of Scheme and Results of meeting with Regional Director | Transferee Company shall file copy of scheme as agreed by members and creditors and Report of results of each of the meetings | Within 7 days of conclusion of meeting of members or creditors in Form CAA 11
(To ROC in Form GNL 1, Regional Director in Form RD 1 and Official Liquidator through hand delivery or Registered Post or Speed Post) |
| Objections to be Communicated to Regional Director | If ROC or the Official Liquidator has any objections then may communicate the same to Regional Director. | – |
| Scheme not in Public interest | The Regional Director, if is of the opinion that the scheme is not in public interest then it may file an application before the Tribunal, to consider the scheme under section 232 (regular merger process).
If the Tribunal is of the opinion that the scheme should be considered under section 232 it should direct accordingly otherwise the scheme shall be approved. |
CAA 12 |
| Approval of the Scheme and filing the Order | When ROC and Official Liquidator approves the scheme then the Regional Director shall consider the same and approve the scheme.
Both the Companies shall file the confirmation of the Scheme. |
INC 28 within 30 days of receipt of the Confirmation of the Scheme |
| Post Merger Steps | ||
| To convene EGM for passing special resolution for change of object clause of transferee company to carry on the business of transferor company and increase of Authorised Share Capital of Transferee Company (Optional) | After Confirmation to the Scheme of Merger is received from Regional Director | |
| Amend MOA and AOA | ||
| MGT 14 for special resolution | Within 30 days of passing of special resolution | |
| Convening Board Meeting for allotment of transferor Company and Issue Share Certificates to the allottees | ||
| Filing Return of Allotment | PAS 3 within 30 days of Allotment | |
| Stamp duty adjudication | Within 30 days of receiving Order of Merger | |
| Intimation to various other stakeholders about approved Scheme of amalgamation including banks | – | |
| Surrender of PAN/ TAN of Transferor Company | – | |
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