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This article has been written by Anupam Bhaduri pursuing Diploma in Mergers and Acquisitions (PE and VC transactions) from LawSikho.


The Company Act, 2013 replaced the 1956 Act on 12th September, 2013. Since then, the new legislation has been enthusiastically accepted and lauded by most corporate personnel owing to the business-friendly corporate regulations and better and elaborate disclosure norms and for providing adequate protection to minorities. These reforms sought to smoothen the process for mergers and acquisitions to take place and strengthens the investor-friendly regime by recognizing shareholder rights. 

The overall process of mergers, acquisitions and restructuring are simplified in the Companies Act 2013 hence facilitating cross border and domestic mergers and acquisitions. This, in turn, makes Indian firms attractive prospects for private equity investors. 

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Previously, the term ‘mergers’ was not defined in the Companies Act, 1956. The Income Tax Act, 1961 also refrained from doing so. The Company Act, 2013 explained the term without expressly defining the term. The Company Act, 2013 stipulates that ‘merger’ is a process which combines two or more business entities into one singular entity. The joining of the different entities also results in the accumulation of assets, resources and liabilities. 

Where any restructuring or amalgamation of two or more companies is to take place and certain compromises or arrangements will have to be made in connection with it, a petition will have to be made praying for orders and directions under Section 230 read along with Section 232 of the Act. It must also be kept in mind that while applying for the restructuring of the company, the Company or companies involved in the process should specify the purpose of the scheme.

Who can file the application for Merger & Amalgamation propose: Section 230(1)

The application for a merger and amalgamation of two or more companies is to be filed with the NCLT. It should be noted that the application needs to be made by both the transferee and transferor company. The application is to be made in the form of a petition to the NCLT under the provisions stipulated under Section 230232 of the Companies Act, 2013 to have the scheme of amalgamation sanctioned.  

Joint Application: Rule 3(2)

MCA issued the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 vide notification dated 14th December, 2016 and were effective from 15th December, 2016. Consequently, all matters related to the CAA would be dealt along with the stipulations laid down in the provisions of the Companies Act, 2013.

Rule 3(2) of the CAA states that in case more than one company is involved in a scheme of amalgamation, the filing for the same can be done jointly. However, where the Companies have different registered offices in different states, the NCLT with the local jurisdictions shall be dealing with the applications separately. The filings will also have to be done separately to the respective NCLTs. 

Process for Joint Application: Rule 3(2)

Before the process is initiated, it is advised to note that the companies undergoing the amalgamation scheme should have it stated in the object clause in their Memorandum of Association. The absence of it is not an impediment though.

  1. Application Format 

The application for the scheme of merger and amalgamation shall be submitted to the tribunal in the specified form NCLT-1 with the following document attached to it as stated in Rule 3(1):  

a. Notice of admission (Form No. NCLT-2) 

b.  Affidavit (Form No. NCLT-6)

c. A valid copy of the Scheme of C and A (Merger & Amalgamation)

d. A disclosure in form of an affidavit which shall include the following points Section 230(2)

–  All material facts concerning the company, such as

  1. the latest financial position of the company as of the due quarter,
  2. the latest auditor’s report based on the accounts of the company and
  3. the pendency of any investigation or proceedings in place against the company

– Reduction of the share capital of the company, if any, included in the compromise or   arrangement

e. Any occurring of corporate debt restructuring that has been consented to by a minimum of 75% of the secured creditors in value, including

  1. Creditor’s Responsibility statement  (Form No. CAA-1).
  2. Safeguards in place for the proper protection of other secured and unsecured creditors;
  3. report by the auditor sating that the fund requirements of the company post-corporate debt restructuring will conform to the liquidity test conducted based upon the estimates that were previously provided to them by the Board;
  4. A statement where the company proposes to adopt a corporate debt restructuring in accordance with the guidelines laid down by the Reserve Bank of India.
  5. A valuation report encompassing all details of the shares, property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer.
  1. Meeting of the Tribunal:

The Tribunal upon hearing the application shall provide with orders as it may think necessary for the meeting of the creditors or members or may conduct the case as specified in Rule 5 of CAA Rules, 2016.

  1. Deciding the venue and time of the meetings to be conducted. ;
  2. Appointing a Chairperson and scrutinizer for the meeting or meetings to be held, along with the fixing the terms of his appointment and his remuneration for the same;
  3. Determining the quorum and the steps to be followed at the meeting including the term of voting, whether by the physical, online presence or by the process of proxy;
  4. Calculating the values of the creditors or the members or class of members;
  5. Intimation of the notice of the meeting and the proper advertisement of such. 
  6. Intimidation of Notice to be provided to sectoral regulators or authorities (sub-section (5) of section 230);
  7. The time stipulation within which the chairperson is supposed to report the final decision of the meeting with the Tribunal; and
  8. Other matters that the Tribunal may deem necessary to take into its consideration.
  1. Notice of Meeting: The Notice of the meeting in accordance with the order of the Tribunal is to be given in the mentioned Form No. CAA-2. Rule 6

Persons who are entitled to be the recipient of the notice- The notice shall be sent to each of the Creditors or Members and the debenture-holders individually at their registered address. Section 230(3)

Persons authorized to send the notice:

  • Chairman of the Company, or
  • If tribunal so direct- by the Company or its liquidator or by any other person

Modes of Sending of notice:

  • Registered post, or by Speed post,  or through courier, or
  • In the form of an e-mail, or by hand delivery, or by any other mode as stipulated by the tribunal

Documents to be sent along with notice:  The notice of the meeting that will be sent will have the following documents attached to it:

  1. A copy of the scheme of C&A 
  2. If the aforementioned scheme is not mentioned, then the following details should be mentioned along with the notice being sent:

The following information from the order passed by the Tribunal where it is directed to call, convene and conduct the meeting:

  • Date of the Order;
  • Date, time and venue of the meeting.

The details of the Company in question including the following:

  • Identity of the company confirmed through Corporate Identification Number (CIN) or Global Location Number (GLN) of the company;
  • A copy of the Permanent Account Number (PAN);
  • Name of the company;
  • Date of incorporation;
  • Statement stipulating the type of the company, whether a private or listed company or one-person company;
  • Registered office address and movies of communication specified;
  • Summary of the main object of business as mentioned in the Memorandum of Association and details regarding the actual business carried out by the company ;
  • A copy of record of change in name or registered address if any in the last five years;
  • List of all stock exchanges where securities of the company are listed, if applicable;
  • All significant details of the capital structure of the company along with authorised, issued, subscribed and paid-up share capital; and
  • List of names of all directors and promoters along with details of their addresses.

3. Joint applications- When and if the scheme for restructuring entailing arrangement or compromise is made to the Tribunal, then the adequate details regarding the relationship between the companies who are party to the arrangement need to be disclosed.

4. Proper disclosures need to be made about the possible effect of the merger and amalgamation on the key managerial personnel, material interests of directors and debenture trustee. 

5. Details of Board Meeting:

  • Date of the board meeting at which the scheme was approved by the board of directors
  • Names of directors who voted for approving the board of directors,
  • Names of the directors who voted against approving the scheme
  • Name of directors who abstained from voting or were absent

6. Explanatory Statement disclosing details of the scheme of compromise or arrangement including:

  • Parties involved in compromise or arrangement;
  • Appointed date, effective date, share exchange ratio (if applicable) and other considerations, if any;
  • 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 report is available for inspection at the registered office of the company;
  • Details of capital or debt restructuring, if any;
  • The rationale for the compromise or arrangement;
  • Benefits of the compromise or arrangement as perceived by the Board of directors to the company, members, creditors and others (as applicable);
  • Amount due to unsecured creditors.

7. Disclosure about the effect of the Merger & Amalgamation (C&A) on Section 230(3)

  • Key Managerial Personnel;
  • Directors;
  • Promoters;
  • Non-Promoter Members;
  • Depositors;
  • Creditors;
  • Debenture holders;
  • Deposit trustee and debenture trustee;
  • Employees of the company:
  • Shareholders of the Company

8. Below Mentioned Details: Following below-mentioned details

  • Pending investigations and proceedings against the Company
  • Details of approvals, sanctions or no-objections from regulatory or governmental authorities.
  • A copy of the valuation report, if any Section 230(3)

9. Details of availability of documents: A list containing the details of the availability of the following documents need to be disclosed for making copies or for obtaining extracts for inspection by creditors and members. 

  • Latest audited financial statements of the company 
  • Latest Consolidated Fund Statements.
  • Copy of the order of Tribunal in pursuance of which the meeting is to be convened;
  • A certified copy of the scheme of merger and amalgamation;
  • Agreements necessary for the material ease of the amalgamation;
  • The certificate issued by Auditor of the company;
  • The scheme of mergers and amalgamation proposed conforms with the stipulations of Section 133 of the Companies Act, 2013;
  • All the documents that the Board of Directors or the Management believes is necessary for a resolution regarding the scheme of amalgamation to take place;

10. Some Other documents: When the Tribunal has made an order under the provisions of Section 232(1), the companies participating in the merger must also circulate the following:

  • Copy of the draft drawn for the proposed scheme that has been adopted by the merging company.
  • Confirmation of the scheme having ben filed with the Registrar;
  • Expert opinion on the valuation

[1] In the case of Kirloskar Electricals Co. Ltd., the Court held that the clauses enumerated under Section 394(1) of the Companies Act stipulate that the application must be made by the transferor and the transferee company under the provisions of Section 397-394 of the Companies Act, 1956.  

[2] In the case of Mohan Exports Ltd. V/s Tarun Overseas Pvt. Ltd., the court held that two companies could make a joint petition for amalgamation if their registered offices were under the same High Court.


It can thus be observed that the Companies Act, 2013 is progressive legislation when read with the Company Rules, 2016. It provides an institutional framework and an impetus to a transparent conducting of business ventures. The topic of mergers and acquisitions was a grey area until the Companies Act, 2013 was enforced. The lack of defined terms concerning an amalgamation proceeding has since changed after the Company Act, 2013 empowered the NCLTs in this regard. 


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