The Companies Act, 2013 (2013 Act) has seen the light of day and replaced the 1956 Act with some sweeping changes including those in relation to mergers and acquisitions (M&A).

The new Act has been lauded by corporate organizations for its business-friendly corporate regulations, enhanced disclosure norms and providing protection to investors and minorities, among other factors, thereby making M&A smooth and efficient. Its recognition of interse shareholder rights takes the law one step forward to an investor-friendly regime. The 2013 Act seeks to simplify the overall process of acquisitions, mergers and restructuring, facilitate domestic and cross-border mergers and acquisitions, and thereby, make Indian firms relatively more attractive to PE investors.

The term ‘merger’ is not defined under the Companies Act, 1956 (“CA 1956”), and under Income Tax Act, 1961 (“ITA”). However, the Companies Act, 2013 (“CA 2013”) without strictly defining the term explains the concept. A ‘merger’ is a combination of two or more entities into one; the desired effect being not just the accumulation of assets and liabilities of the distinct entities, but organization of such entity into one business.

On 7th November, 2016 Central Government issued a notification for enforcement of section 230-233, 235-240, 270-288 etc w.e.f. 15th December, 2016. But still rules were not available till date for CAA.

MCA vide notification dated 14th Dec, 2016 has issued rules i.e. The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. These rules will be effective from 15th December, 2016. Consequently, w.e.f. 15.12.2016 all the matters relating to Compromises, Arrangements, and Amalgamations (hereafter read as “CAA”) will be dealt as per provisions of Companies Act, 2013 and The Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016.

Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the Act.

  Section relating to Merger & Amalgamation Section 230 & 232.

In this article COMPROMISE & ARRANGMENT (C&A) will be read in relation to Merger & Amalgamation only.

In Case of application filing u/s 230 for Compromise & Arrangement in relation to reconstruction of the Company or companies involving merger or the amalgamation of any two or more companies should specify the purpose of the scheme.

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

[1]An application for Merger & Amalgamation can be file with Tribunal (NCLT). Both the transferor and the transferee company shall make an application in the form of petition to the Tribunal under section 230-232 of the Companies Act, 2013 for the puspose of sanctioning the scheme of amalgamation.
Joint Application: Rule 3(2)
Where more than one company is involved in a scheme, such application may, at the discretion of such companies, be filed as a joint-application.
[2]However, where the registered office of the Companies are in different states, there will be two Tribunals having the jurisdiction over those, companies, hence separate petition will have to be filed.
§  It must be ensure that the companies under amalgamation should have the power in the object clause of their Memorandum of Association to undergo amalgamation though the absence may not be an impediment, but this will make matters smooth.

§  A draft scheme of amalgamation shall be prepared for getting it approved in Board meeting of each company.

1.      Format of Application
Application to the tribunal for Merger & Amalgamation will be submitted in form no. NCLT-1 along with following documents: Rule 3(1)
a)    A notice of admission in Form No. NCLT-2
b)    An affidavit in form no. NCLT-6
c)    A copy of Scheme of C&A (Merger & Amalgmation)
d)    A disclosure in form of affidavit including following points Section 230(2)
-  All material facts relating to the company, such as
           i.        the latest financial position of the company,
          ii.        the latest auditor’s report on the accounts of the company and
        iii.        the pendency of any investigation or proceedings against the company
- Reduction of share capital of the company, if any, included in the compromise or   arrangement
e)    Any scheme of [3]Corporate Debt Restructuring consented to by not less than seventy five per cent. of the secured creditors in value, including

           i.        A Creditor’s Responsibilitystatement in the form No. CAA-1.
          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.

f)     The applicant shall also disclose to the Tribunal in the application, the basis on which each class of members or creditors has been identified for the purposes of approval of the scheme.

2.      Calling of Meeting by Tribunal:
Upon hearing of the application Tribunal shall, unless it thinks fit for any reason to dismiss the application, give such directions / order as it may think necessary in respect 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 prescribed in rule 5 of CAA Rules, 2016 as follow:
           i.        Fixing the time and place of the meeting or meetings;
          ii.        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;
        iii.        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;
         iv.        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;
          v.        Notice to be given of the meeting or meetings and the advertisement of such notice.
         vi.        Notice to be given to sectoral regulators or authorities as required under sub-section (5) of section 230;
       vii.        The time within which the chairperson of the meeting is required to report the result of the meeting to the Tribunal; and
     viii.        Such other matters as the Tribunal may deem necessary.

3.    Notice of Meeting: The Notice of the meeting pursuant to the order of tribunal to be give in Form No. CAA-2.  Rule 6

Person entitled to receive the notice The notice shall be sent individually to each of the Creditors or Members and the debenture-holders at the address registered with the company. Section 230(3)

Person 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:
§  By [4]Registered post, or by Speed post, orby courier, or
§  By e-mail, or by hand delivery, or by any other mode as directed by the tribunal
Documents to be send along with notice: The notice of meeting send with (i) Copy of Scheme of C&A and (ii) Following below mentioned details of C&A if not included in the said scheme:
a.     Details of the order of the Tribunal directing the calling, convening and conducting of the meeting:-
§  Date of the Order;
§  Date, time and venue of the meeting.

b.     Details of the company including:
§  Corporate Identification Number (CIN) or Global Location Number (GLN) of the company;
§  Permanent Account Number (PAN);
§  Name of the company;
§  Date of incorporation;
§  Type of the company (whether public or private or one person company);
§  Registered office address and e-mail address;
§  Summary of main object as per the memorandum of association; and main business carried on by the company;
§  Details of change of name, registered office and objects of the company during the last five years;
§  Name of the stock exchange (s) where securities of the company are listed, if applicable;
§  Details of the capital structure of the company including authorised, issued, subscribed and paid up share capital; and
§  Names of the promoters and directors along with their addresses.

c.     Relationship in case of Combined Application: if the scheme of compromise or arrangement relates to more than one company, then 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.

d.     Disclosure about effect of M&A on material [5]interests of directors, Key Managerial Personnel (KMP) and debenture trustee

e.     Details of Board Meeting:

§  The date of the board meeting at which the scheme was approved by the board of directors
§  The name of the directors who voted in favour of the resolution,
§  The name of the directorswho voted against the resolution and
§  The name of the directorswho did not vote or participate on such resolution

f.     Explanatory Statement disclosing details of the scheme of compromise or arrangement including:
§  Parties involved in such 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;
§  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.

g.     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:
§  Share holders of the Company

h.     A report adopted by the directors of the merging companies explaining effect of compromise on each class of shareholders, key managerial personnel, promoters and non-promoter shareholders laying out in particular the share exchange ratio, specifying any special valuation difficulties;

i.      Below Mentioned Details: Following below mentioned details
§  Investigation or proceedings, if any, pending against the company under the Act.
§  Details of approvals, sanctions or no-objection(s), if any, from regulatory or any other governmental authorities required, received or pending for the proposed scheme of compromise or arrangement
§  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 electronic means
§  A copy of the [6]valuation report, if any Section 230(3)

j.      Details of avaibility of documents: Details of the availability of the following documents for obtaining extract from or for making or obtaining copies of or for inspection by the members and creditors, namely

§  Latest audited financial statements of the company including consolidated financial statements;
§  Copy of the order of Tribunal in pursuance of which the meeting is to be convened or has been dispensed with;
§  copy of scheme of Merger & Amalgamation ( C&A);
§  Contracts or agreements material to the Merger & Amalgamation ( C&A);
§  The certificate issued by Auditor of the company to the effect that the accounting treatment, if any,
§  Proposed in the scheme of Merger & Amalgamation ( C&A) is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013; and
§  Such other information or documents as the Board or Management believes necessary and relevant for making decision for or against the scheme;

k.     Some Other documents: Where an order has been made by the Tribunal under section 232(1), merging companies or the companies in respect of which a division is proposed, shall also be required to circulate the following:

§  The draft of the proposed terms of the scheme drawn up and adopted by the directors of the merging company;
§  Confirmation that a copy of the draft scheme has been filed with the Registrar;
§  The report of the expert with regard to valuation, if any;
§  Supplementary accounting statement if the last annual accounts of any of the merging company relate to a financial year ending more than six months before the first meeting of the company summoned for the purposes of approving the scheme

 4.       [7]Advertisement of Notice of Meeting: The Notice of the meeting shall be advertised in form No. CAA-2 at lease in one English Newspaper and in at least one vernacular language newspaper. it shall indicate the time within which copies of the compromise or arrangement shall be made available to the concerned persons free of charge from the registered office of the company

·         Such Newspaper shall be published on the website of the company at least 30 days before the date fixed for meeting, as directed by tribunal. Section 230(3)
·         In case of Listed Company, such notice and other documents shall also be published on the website of SEBI and stock exchange, where securities of the Company are listed.

5.                Notice to Statutory Authorities: Section 230(5) and Rule 8
A notice in Form No CAA-3 along with Copy of Scheme of C&A, the explanatory statement and Disclosures mentioned in point No.5 above, shall also be sent to followings:
§  The Central Government, The Registrar of Companies and The income-tax authorities, in all cases
§  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.
§  Other Sectoral Regulators or authorities, as required by Tribunal.
Notice shall be sent to the office of the authority after sending of notice to members or creditors of the Company by Registered post, or by Speed post, or by courier, or by hand delivery.
Representation by authority:
·         The authority desire to make any representation then shall sent to the tribunal within a period of 30 days from the date of receipt of such notice.
·         Copy of such representation shall simultaneously be sent to the concerned companies
·         In case of no representation within the 30 days then presumed that authority doesn’t have any representation

6.    Voting:

The persons to whom the notice is sent may vote in the meeting either themselves or through [8]proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice. Section 230(4) Rule 9
Right of Objections: Section 230(4)
Any objection to the compromise or arrangement shall be made only by
§  Persons holding not less than 10% (Ten Percent). 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

Other Conditions for C&A:

I.    Copy of Compromise or arrangement to be furnished by the company:
The Company on the requisition of the creditors or members entitled to attend meeting shall furnish a copy of scheme of C&A and copy of statement required to furnish in section 230(2)(c) with in one day of requisition.

II.    Affidavit of Service:

Liability to Service: The Chairperson appointed for the meeting of the company or other person directed to issue the advertisement and the notices of the meeting.

[9]Above mentioned shall file an affidavit before the Tribunal at least seven days before the date fixed for the meeting or the date of the first of the meetings, as the case may be, stating that the directions regarding the issue of notices and the advertisement have been duly complied with.

SECOND STEP- Result of Meeting
III.    Copy of Merger &  Amalgamation to be furnished by the company:

Method of Voting: The voting at the meeting or meetings held in pursuance of the directions of the Tribunal on all resolutions shall take place by poll or by voting through electronic means.

The report of the result of the meeting shall be in Form No. CAA.4 and shall state accurately
·         The number of creditors or class of creditors or
·         The number of members or class of members, as the case may be,
§  who were present and
§  who voted at the meeting either in person or by proxy, and
§  Where applicable, who voted through electronic means, their individual values and the way they voted.

IV.    Report of the result of the meeting by Chairperson: - [10]The Chairperson of the meeting shall, within the time fixed by the Tribunal, or where no time has been fixed, within 3 (Three) days after the conclusion of the meeting, submit a report to the Tribunal on the result of the meeting in Form No. CAA.4.

V.      Binding of approval: Section 230(6)
Where, at a meeting majority of persons representing three-fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any Merger &  Amalgamation AND if such Merger &  Amalgamation  is sanctioned by the Tribunal by an order,

The same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator and the contributories of the company.
THIRD STEP- Order of Tribunal
After completion of the Voting and report of result of the meeting by the chairman to the tribunal next step will be confirmation of C&A form the Tribunal (NCLT).
VI.      Petition for confirming Merger & Amalgamation Rule 15

The Company shall, within 7 (seven) days of the filing of the report by the Chairperson, present a petition to the Tribunal in Form No. CAA.5 for sanction of the scheme of compromise or arrangement. The petitioner will pray for the appropriate orders and directions from the Tribunal.

Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the Act.

Right of Creditor to file the petition: Where the company fails to present the petition for confirmation of the Merger & Amalgamation 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.
VII.       Order by Tribunal Rule 12;
Where the Tribunal sanctions the Merger & Amalgamation, An order made under section 232 read with section 230 of the Act shall be in Form No.CAA.7 with such variation as the circumstances may require.
Fourth STEP- Provisions by the Tribunal
The Tribunal, after satisfying itself that the procedure specified in sub-sections (1) and (2) has been complied with, may, by order, sanction the compromise or arrangement or by a subsequent order, make provision for the following matters, namely:—

(a) the transfer to the transferee company of the whole or any part of the undertaking, property or liabilities of the transferor company from a date to be determined by the parties unless the Tribunal, for reasons to be recorded by it in writing, decides otherwise;

(b)[11] the allotment or appropriation by the transferee company of any shares, debentures, policies or other like instruments in the company which, under the compromise or arrangement, are to be allotted or appropriated by that company to or for any person:

(c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company on the date of transfer;

(d) dissolution, without winding-up, of any transferor company;

(e) the provision to be made for any persons who, within such time and in such manner as the Tribunal directs, dissent from the compromise or arrangement;

(f) where share capital is held by any non-resident shareholder under the foreign direct investment norms or guidelines specified by the Central Government or in accordance with any law for the time being in force, the allotment of shares of the transferee company to such shareholder shall be in the manner specified in the order;

(g) the transfer of the employees of the transferor company to the transferee company;

(h) where the transferor company is a listed company and the transferee company is an unlisted company,—

(A) the transferee company shall remain an unlisted company until it becomes a listed company;
(B) if shareholders of the transferor company decide to opt out of the transferee company, provision shall be made for payment of the value of shares held by them and other benefits in accordance with a pre-determined price formula or after a valuation is made, and the arrangements under this provision may be made by the Tribunal:
    Provided that the amount of payment or valuation under this clause for any share shall not be less than what has been specified by the Securities and Exchange Board under any regulations framed by it;

(i) where the transferor company is dissolved, the fee, if any, paid by the transferor company on its authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation; and

(j) such incidental, consequential and supplemental matters as are deemed necessary to secure that the merger or amalgamation is fully and effectively carried out:
     Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company’s auditor has been filed with the Tribunal 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.
Fifth STEP- Effect of Order of Tribunal
Transfer of Property: Section 232(4)
Where an order under this section provides for the transfer of any property or liabilities, then, by virtue of the order, that property shall be transferred to the transferee company and the liabilities shall be transferred to and become the liabilities of the transferee company and any property may, if the order so directs, be freed from any charge which shall by virtue of the compromise or arrangement, cease to have effect.

Appointed Date: Section 232(6)
The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date.

Filing of Order of Tribunal: Section 232(5)
The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the copy of order, or such other time as may be fixed by the Tribunal.
Sixth STEP- Compliances after obtaining of order of Tribunal
Compliance until completion of scheme: Every company in relation to which the order is made shall, until the completion of the scheme, file a statement in Form No. CAA.8 and within two hundred and ten days from the end of each financial year with the Registrar every year duly certified by a chartered accountant or a cost accountant or a company secretary in practice indicating whether the scheme is being complied with in accordance with the orders of the Tribunal or not.
Power of Tribunal
Report on working of compromise or arrangement: At any time after issuing an order sanctioning the compromise or arrangement, the Tribunal may, either on its own motion or on the application of any interested person, make an order directing the company or where the company is being wound-up, its liquidator, to submit to the Tribunal within such time as the Tribunal may fix, a report on the working of the said compromise or arrangement and on consideration of the report, the Tribunal may pass such orders or give such directions as it may think fit.
 Some other Clauses
When the scheme envisages various incidental proposals as an integral part of the scheme, the procedures prescribed under the Companies Act, 2013 need not to be separately undertaken:
S. No.
Case Law
Change of Name
Change of name can be carried out as a part of the Scheme.
Jaypee Cement Ltd.
Change of Object
Change of Object shall be part of the scheme
PMP Auto Industries Limited
Reduction of Capital
If reduction of capital is a part of scheme of amalgamation. The provisions of section 66 need not to be complied separately.

Re. Maneckchowk and Ahmedabad Mfg. Co. Ltd.
Sell & Lease of Company Property
No need to comply with the provisions of section 180(1)(a) for sale, lease, etc. of the Company’s property
HCL Infosystems Ltd.
S. No.
Sections of the Companies Act, 2013
Rule Number
Nature of application or petition
Sub-section (1) of Section 230
3 (1)
Application for compromise arrangement and amalgamation.
Rs. 5,000/-
Sub-section (2) of Section

Application by dissenting shareholders
Rs. 1,000/-
Sub-section (2) of Section
Appeal against order of Registrar refusing to register
any circular.
Rs. 2,000/-

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at
Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.
This is only a knowledge sharing initiative and author does not intend to solicit any business or profession.


[1] In the case of Kirloskar Electricals Co. Ltd., the Court held that various clauses of Section 394(1) of the Companies Act suggest that both the transferor and the transfer company shall make an application to the Court and under section 391-394 of the Companies Act, 1956 for sanction of the scheme of Compromise or arrangement involving amalgamation of the Companies.
[2] In the case of Mohan Exports Ltd. V/s Tarun Overseas Pvt. Ltd., it was held that if both the Companies are under the jurisdiction of the same High Court, Joint petition may be made.
[3] Scheme of Corporate Debt restructuring as referred in section 230(2)(c) means “a scheme that restructures or varies the debt obligation of a company toward its creditors”.
[4] It is hereby clarified that the service of notice of meeting shall be deemed to have been effected in case ofdelivery by post, at the expiration of forty eight hours after the letter containing the same is posted

[5]Explanation – For the purposes of these rules it is clarified that-
(a) the term ‘interest’ extends beyond an interest in the shares of the company, and is with reference to the proposed scheme of compromise or arrangement.
(b) the valuation report shall be made by a registered valuer, and till the registration of persons as valuers is prescribed under section 247 of the Act, the valuation report shall be made by an independent merchant banker who is registered with the Securities and Exchange Board or an independent chartered accountant in practice having a minimum experience of ten years.
[6] the valuation report shall be made by a registered valuer, and till the registration of persons as valuers is prescribed under section 247 of the Act, the valuation report shall be made by an independent merchant banker who is registered with the Securities and Exchange Board or an independent chartered accountant in practice having a minimum experience of ten years
[7] Where separate meeting of classes of creditors or members are to be held, a joint advertisement for such meetings may be given.

[8] Guidelines for proxy given in rule no 10.
[9] In case of default under this provision, the application along with copy of the last order issued shall be posted before the Tribunal for such orders as it may think fit to make
[10] Where there are separate meetings, the Chairperson of each meeting.
[11] Provided that a transferee company shall not, as a result of the compromise or arrangement, hold any shares in its own name or in the name of any trust whether on its behalf or on behalf of any of its subsidiary or associate companies and any such shares shall be cancelled or extinguished;


  1. Great share!

    I love this bucket list and you know you're right. sand blasting machine manufacturer. We all have the same amount of hours in a day so put them to good use. We all have to start somewhere and your plan is perfect. I understand the way of the attractive to the customer with the products sand blasting machine.

    Sand blasting machines like shot blasting machine, sand blasting machine, and grit blasting machines, Wood Working Machinery Dust Extraction unit, Abrasive Blasting Media and various others. Keep it works and share with us your latest information. My time will come but I know I'm on the right path.

    They are similar to small communities that you own - check them out if you haven't already. It's all got a lot better than before!t. Value that list of thousands but I'll get there.

    Thanks for sharing. Have a nice week ahead.
    Visit at :

    Also check
    portable shot blasting machine
    portable sand blasting machine
    sand blasting cabinet
    grit blasting cabinet
    shot blasting cabinet

    Ankit Manawat.


Post a Comment

Popular posts from this blog

Declaration of Commencement of Business - Series 487

Vacancy Updates (Through Google Form) | Dated: 20-August-2020

Draft Format of DIRECTOR’ REPORT - Series 482