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This article is written by Shivani Garg, pursuing a Diploma in Business Laws for In House Counsels from


Sula Vineyards are the two words that can give anyone a nostalgic feeling. The most famous 3-days annual SulaFest of Nashik is widely known for its quality wine, delicious food, music, camping, and anything one can think of when it comes to giving a kickstart to your year with a bang. It’s an event one shouldn’t miss and can’t forget when in Maharashtra. There is so much to talk about when one starts expressing their experience about this Gourmet World Music Festival, Sula Fest of Nashik Vineyards but here we would rather talk about the most interesting talk of the town of 2021, which is the merger of Sula Winery and York Winery. So, what exactly is a merger?

A merger which is also defined as an amalgamation is a combination of two different companies where one corporation is completely absorbed by another corporation. There can be any motive behind the mergers from the economics of the sale to increased revenue/increased market share, cross-selling, corporate synergy, taxes, or geographical diversification. Well, the reason for this merger included every reason that I have mentioned along with that of expansion of Sula operations. As per the views of Rajeev Samant, his merger is a triple win – for York, Sula, and wine consumers. But here we will not talk about those things rather we will talk about the road less covered which is Indian laws and the merger of two wineries of ‘the Wine Capital of India’ – one is the Sula Winery, which is the leading winery in India founded by Mr. Rajeev Samant in 1999 and other is the York Winery, founded by Mr. Lilo Gurnani in 2008, is known for its practices of fine winemaking and harvesting best quality of grapes across Nashik. Trust me, someday you might need this piece of information if you land your feet into the wine business in India and further planning for expansion. Let’s see what kind of laws you need to keep in mind while doing a merger in India.

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Different laws regulating merger

Well, we can’t think of any merger without ignoring the law of the land. When we talk about the merger of the company and Indian laws there are certain acts that govern the entire process, you need to keep in mind as you have to abide by them, namely: 

  1. The Company Act, 2013; 
  2. The Competition law; 
  3. FEMA;
  4. SEBI Takeover Code, and 
  5. The Indian Income Tax Act (ITA). 

The provisions that need consideration under these laws are:

  • The Companies Act, 2013: Under this Act, Sections 390 to 395 are ones that deal with arrangements, amalgamations, mergers, and the procedure that needs to be followed for getting the arrangement, compromise, or the scheme of amalgamation approved.
  • Competition Act, 2002: Under this Act, Section 5 deals with “Combinations” which defines combination by reference to assets and turnover – exclusively in India, in India, and outside India.
  • Foreign Exchange Management Act (FEMA), 1999: The regulations under this act provide general guidelines on issuance of shares or securities by an Indian entity to a person who is residing outside India or recording in its books any transfer of security to or from such a person.
  • SEBI Takeover Code, 1994: The regulations mentioned under SEBI permit the consolidation of shares or voting rights beyond 15% up to 55%, with the proviso that the acquirer does not acquire more than 5% of shares or voting rights of the target company in any financial year.
  • The Indian Income Tax Act (ITA), 1961:  The provisions related to mergers are covered in this act under the definition clause of amalgamation – Section 2(1B). The term ‘merger’ is not specifically defined under the ITA.

Apart from the above-mentioned laws, one needs to get mandatory permission from the courts for the scheme of merger. For that, the Company Act specifically provides that only the high court of the respective states where the transferor and the transferee companies have their registered offices have the necessary jurisdiction to regulate the merger of the companies registered in or outside India. Further, you can’t miss out on the stamp duty which varies from state to state as per the Stamp Act. As per the Bombay Stamp Act, Section 25 of Schedule 1 states the rate of Stamp duty is 10% on conveyance relating to the amalgamation of companies. Knowing about the laws won’t help you until you are not aware of the applicability of the same. Let’s see what legal procedure needs to be carried out while proceeding through the merger of the company.

The legal procedure for mergers of company

So there are few major things when you bring about the mergers which as:

  • Examination of object clauses: It is important to check if the object clause of the merging company permits to carry on the business of the merged company or not. It’s important that it should permit the same.
  • Intimation to the stock exchange: Where both the companies are listed on the stock exchanges should be informed about the merger proposal. Furthers, copies of all notices, resolutions, and orders should be mailed to the concerned stock exchange from time to time.
  • Approval of the draft of the merger proposal by the respective board: As per the Company Act, the board of each company should pass a resolution authorising its executives/directors to pursue the matter further.
  • Application to high courts: After the approval of the draft of merger proposal by the respective board, each company is supposed to make an application to the high court of the state (here, in this case, is Bombay High Court) where its registered office is situated so that it can convene the meetings of shareholders and creditors for passing the merger proposal.
  • Dispatch of notice to shareholders and creditors: An approved notice by the high court should be dispatched in order to convene the meetings of shareholders and creditors so that they get 21 days advance information. Also, a notice of such meetings should be published in two newspapers.
  • Holding of meetings: To pass the scheme for merger at least 75% of shareholders who vote either in person or by proxy must approve the same. The same goes for creditors.
  • Petition to High Court for confirmation and passing of HC orders: After passing the merger scheme, the companies involved in the merger should present a petition to HC for confirmation. A notice must be published about the same in 2 newspapers.
  • Filings the order with the registrar: Once all the approvals are set in order, certified true copies of the HC order must be filed with the registrar of companies within the time limit that is specified by the court.
  • Transfer of assets and liabilities: Once the final orders have been passed by the respective HC’s (here, it’s just Bombay HC), all the assets and liabilities of the merged company will have to be transferred to the merging company.
  • Issue of share and debentures: Once all the provisions of the law are fulfilled by the merging company, it should issue its shares and debentures. The newly issued shares and debentures will then be listed on the stock exchange.

Although the entire process of a merger is really time-consuming and too much of a hassle, it’s a life-changing event as well for the better or worse depending on how they carry forward with their goals.

How will these laws be applicable to Sula Winery and York Winery?

Although York is a family-owned winery with no partnership, the other party in this horizontal merger is Sula Winery, the company registered under the laws of India, to which all the laws mentioned in the Companies Act, 2013 of India are applicable. Along with that, all the other laws that are mentioned above become applicable. Which is to say, both Sula Winery and York Winery are in compliance to follow the law as well as the procedure as per the law of land i.e. Indian laws. The motive behind the merger was to help the small winery like York to have a wider distribution and for Sula to expand its hospitality operations. Well, nothing is compromised in this deal as York will continue the great winemaking tradition of the Gurnani family with Kapil Gurnani continuing as winemaker and brand ambassador after the merger. Not only that, both the companies will be benefited in terms of taxation, synergy, increasing market share, greater value integration, and a higher level of competitiveness. Let’s see how these two companies are benefited out of this merger:

  • To begin with, the horizontal kind of merger between both wineries reduced the level of competition in the wine industry and further created economies of sale.
  • When it comes to taxation, there is a benefit in terms of the carry forward and set off of an accumulated loss and unabsorbed depreciation allowance.  There is a capital gains tax exemption as well.
  • Improvement in combined market share.
  • Synergy benefits: When two companies combine their efforts, operational costs will decrease, and each company’s performance will improve. A company will often decide to merge with another company because the weaknesses and strengths of both organisations complement each other.
  • Mutual interest in expansion. 


The merger is a possibility and it would create important synergies for both lenders.– NiccoloPini. Mergers are usually a big move for any company. As per the experts, more than 50% of the mergers usually fail because of mismanagement which is the aftermath once the entire process of the merger has taken place but these mergers will speak the other story which is of success as things seem to be quite clear between both the parties. York Winery, which is a family-owned Nashik-based business acquired by Sula Vineyards, becomes a wholly-owned subsidiary of Sula. The deal not only sounds but is also claimed as a mutually beneficial one as it will allow York to gain greater distribution while Sula will be able to extend its wine tourism offerings to York’s facilities which also includes its tasting room and a restaurant. Although the merger between both parties has kept the financial matters very private, the terms are made clear from the York side on various platforms that the York label would continue to prosper. Along with that, it is stated that label rights have been sold to Sula- lock, stock, and barrel.  On the front side, everything is visible as a win-win move for the winery holders but only time will tell how the move was in reality. With the big companies like Sula taking advantage of the situation and merging with the small companies, the Anti-Competition law of India comes into question. You will be surprised and devastated to know that wine and spirits are in the same category and wine is a very small part of the total market and such deals would not be covered under the Act. Ironically speaking, the brands that could not be available earlier to wine connoisseurs in Delhi, Bangalore, or Haryana might now be available as ‘York’ labels become a part of Sula stable. Surely, that seems to be a great deal from the merger for customers.


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