+91 9836047798 admin@legalmantra.net

View News

Submit Query
26 May 2024

Fast-Track-Merger-Process-Under-Section-233-of-the-Companies-Act-2013

Fast-Track-Merger-Process-Under-Section-233-of-the-Companies-Act-2013

Fast Track Merger Process Under Section 233 of the Companies Act, 2013

Eligibility Criteria

  1. Types of Companies Eligible for Fast Track Merger:

    • Between two or more small companies.
    • Between two or more start-up companies.
    • Between a holding company and its wholly-owned subsidiary (WOS).
    • Between one or more small companies and one or more start-up companies.

  2. Definition of Small Company (Section 2(85) of the Companies Act, 2013):

    • Not a public company.
    • Paid-up share capital does not exceed INR 4 Crores.
    • Turnover does not exceed INR 40 Crores.
    • Exceptions:
      • Holding companies and their subsidiaries.
      • Companies registered under Section 8.
      • Companies governed by a special act.

  3. Definition of Start-Up Company:

    • A private company incorporated not more than 10 years ago.
    • Turnover does not exceed INR 100 Crores.
    • Must fulfill one of the following:
      • Working towards innovation, development, or improvement of products, processes, or services.
      • Scalable business model with high potential for employment generation or wealth creation.

Steps for Fast Track Merger Process

  1. Step 1: Verify MOA

    • Check the Memorandum of Association (MOA) of both companies to ensure that mergers are allowed and the objectives of each company are compatible.

  2. Step 2: Board Meeting and Approval

    • Hold a board meeting and pass a Board Resolution (BR) to approve the merger.
    • Prepare and approve the proposed scheme of merger.

  3. Step 3: Submission of Proposed Scheme

    • Send the proposed scheme of merger to the Registrar of Companies (ROC) and the Official Liquidator in Form CAA-9.
    • ROC and Official Liquidator have 30 days to raise any objections.

  4. Step 4: Declaration of Solvency

    • Both companies must file a declaration of solvency to the ROC in Form CAA-10.

  5. Step 5: Shareholder Approval

    • Consider any objections received from the ROC/Official Liquidator.
    • Send a notice to all shareholders at least 21 days before the meeting.
    • Obtain approval from at least 90% of the shareholders in value.

  6. Step 6: Creditor Approval

    • Send a notice to all creditors at least 21 days before the meeting.
    • Obtain approval from at least 90% of the creditors in value.

  7. Step 7: Filing with Central Government and Official Liquidator

    • Within 7 days of the conclusion of the meetings, file a copy of the scheme and the result of the meetings in Form CAA-11 to the Central Government and the Official Liquidator.

  8. Step 8: Filing with ROC

    • File Form CAA-11 and GNL-1 with the ROC.

  9. Step 9: Central Government Review

    • The Central Government will inquire with the ROC about any objections.
    • The ROC must respond within 30 days.

  10. Step 10: Central Government Decision

    • If there are objections and the Central Government deems them valid, it will communicate them to the National Company Law Tribunal (NCLT) in Form CAA-13 within 60 days.
    • If the NCLT finds that the scheme should not proceed under Section 233, it will mandate following the procedure outlined in Section 230.

  11. Step 11: Approval and Filing with ROC

    • If there are no objections from the NCLT, the scheme will be approved in Form CAA-12.
    • Once approved by the Central Government, the company must file Form INC-28 with the ROC within 30 days of the approval.

Important Forms in the Process

  1. CAA-9: Copy of the proposed scheme.
  2. CAA-10: Declaration of solvency.
  3. CAA-11: Copy of the approved scheme to the Central Government and Official Liquidator.
  4. CAA-12: Approval of the scheme by the Central Government.
  5. CAA-13: Objection by the Central Government to the NCLT.
  6. GNL-1: Copy of the approved scheme to the ROC.
  7. INC-28: Intimation to the ROC about the approval of the scheme.

Timelines for the Process

-  7 days: Time to hold a board meeting.

-  30 days: Time for the ROC to raise objections to the proposed scheme.

-  21 days: Notice period for the shareholders' meeting.

-  21 days: Notice period for the creditors' meeting.

-  7 days: Time to file the approved scheme with the ROC, Central Government, and Official Liquidator.

-  30 days: Time for the ROC to respond with any objections.

-  60 days: Time for the Central Government to communicate objections to the NCLT.

-  30 days: Time to file Form INC-28 with the ROC after scheme approval.

Total Duration: 206 days

"Unlock the Potential of Legal Expertise with LegalMantra.net - Your Trusted Legal Consultancy Partner”

Article Compiled by:-

Neel Lakhtariya

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.