Fast track merger provision and procedure

The Government has introduced the new concept of fast track merger under the Companies act, 2013 for small companies and wholly owned subsidiary companies. The government notified the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 under section 230 to 233 and Section 235 to 240 of the Companies Act, 2013 w.e.f. 15th December, 2016. This section does not only provide for merger but also scheme of compromise or arrangement of companies with its members and/or creditors and demerger. The eligible companies need not have to follow the cumbersome and tedious provision of Section 230 and 232 of the companies act, 2013 and also the approval of the various authorities like Income Tax authorities, other sectoral regular and authorities are done away. The Company also need not have to go to NCLT for the approval of the same. Therefore, in real terms this is a fast and cost effective provision of the eligible companies. If the companies need, they can follow the normal route of merger/demerger.


Following companies has an option for fast track merger/demerger as per section 233 of the Companies Act, 2013

  1. Merger of 2 or more specified small companies: A small company is a private company that meets either of the following requirements:
    • Its paid-up capital does not exceed INR 5 million (or higher amount, as may be prescribed, and should not be more than INR 50 million).
    • Its turnover (according to its last profit and loss account) does not exceed INR 20 million (or a higher amount, as may be prescribed, which will not be more than INR 200 million)
  2. Merger between holding and its wholly owned subsidiary
  3. Such other classes of companies as may be prescribe


S.No Procedure/provision Timeline Forms
1 Notice of Board meeting (BM) to the directors of transferor and transferee company
Agenda of BM:
  • Adoption of valuation report
  • Determining of share exchange ratio
  • Approval of merger/demerger proposed scheme
At Least 7 days before the meeting
2 Convene BM and adopted the agenda items
3 Notice of proposed scheme to be sent to ROC and Official Liquidator (OL)
Notice of the proposed scheme inviting objections or suggestions, if any, within 30 days, to be sent by Transferor Company and
Transferee company to ROC (where registered office is situated), OL and persons affected by the scheme along with copy of scheme.
4 Filing of declaration of solvency with ROC
Transferee and Transferor Company shall be required to file declaration of solvency with ROC (where registered office is situated).
Before Convening meeting of members and creditors for approval of the Scheme CAA 10
5 Sending notice of member and creditors (if any) meeting
Notice and explanatory statement of convening meeting of members and/or creditors to approve the Scheme shall be accompanied with:
  1. Statement disclosing details/facts of the company's, capital structure, details of promoters, directors etc.
  2. Copy of Scheme
  3. Declaration of solvency in Form CAA 10.
6 Convene meeting of member and creditors (if any)
  1. Members meeting: approved the scheme and also considered the objection raised (if any) by members (at least 90% of total number of shares) of both the companies
  2. Creditors meeting: approved the scheme by the majority (9/10th in value of creditors or each class of creditors of both the companies)
7 Filing of documents with CG (delegated to RD), ROC and OL Transferee Company shall require to file following documents with CG:
  1. Copy of Scheme as approved by members and creditors
  2. Report of the result of each of the meetings.
  3. Copy of the Scheme along with relevant forms shall also be filed with ROC and OL.
Within seven days of conclusion of meeting of members and/or creditors CAA 11
GNL – 1
8 Filing of members and creditors resolution with the ROC Transferee and transferor company shall file special resolution (approval of themerger/demerger scheme) of members and creditors (if any) meeting. Within 30 days of conclusion of meeting of members and/or creditors MGT-14
9 Approval of Scheme by CG Where no objection/suggestion to the Scheme is received from ROC and OL, or objection is deemed to be unsustainable and the CG is of the opinion that the Scheme is in the public interest or in the interest of creditors, CG shall issue a confirmation order of such Scheme of merger or amalgamation.
Where objection/suggestions are received from ROC and OL and CG on the basis of objection received or otherwise is of the opinion that Scheme is not in the public interest or in the interest of creditors, CG may file an application before Tribunal for consideration of Scheme u/s 232 of the CA, 2013.
Application shall be filed within 60 days of receipt of scheme CAA 12
CAA 13
10 Filing of confirmation order with ROC Confirmation order of CG shall be filed with ROC. Within 30 days of receipt of confirmation order Form INC- 28


The registration of the scheme with the Central Government has the following effects:

  1. Dissolution of the transferor company without the process of winding up
  2. Transfer of property or liabilities of the transferor company to the transferee company
  3. The charges on the property of the transferor company shall be applicable and enforceable as if the charges were on the property of the transferee company
  4. Legal proceedings by or against the transferor company pending before any court of law shall be continued by or against the transferee company
  5. If scheme provides for purchase of shares held by the dissenting shareholders or settlement of due to dissenting creditors, such amount to the extent if unpaid shall become the liability of the transferee company
  6. Cross company shareholding are not allowed and the same shall be cancelled or extinguished by merger or amalgamation

TREATMENT OF ROC FEES ON ENHANCED AUTHORISED SHARE CAPITAL SEC 234(11) The transferee company shall file an application with the ROC along with the scheme registered, indicating the revised authorised share capital and pay the prescribed fee due on revised capital.

Provided the transferor company paid any fee on the authorised share capital prior to merger or amalgamation shall be set off against the fee payable by the transferee company on its authorized share capital enhanced by the merger or amalgamation.

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