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Section 232 Of Companies Act 2013: Procedure For Merger and Amalgamation

Updated: Oct 7, 2022

What is Merger and Amalgamation?

Amalgamation is the process in which two or more companies unite or blend together into one. In this process, the shareholders will hold blended undertakings of both companies. Merger is a form of amalgamation where all the properties and liabilities of the transferor company get merged with the properties and liabilities of the transferee company leaving behind nothing with the transferor company except its name (which also might get removed through the process of law).

Section 232 of Companies Act 2013

This provision states that if the application is made to the tribunal under section 230 of The Companies Act, 2013 involves a merger or amalgamation then along with the procedure given under section 230, some additional points have to be kept in mind by the tribunal:

  1. Along with the notice of the meeting, the following should also be provided

  • Draft scheme of merger or amalgamation,

  • Report of the effect of such merger or amalgamation on each class of shareholders,

  • Report of valuation of merger or amalgamation,

  • Other disclosures.

2. While passing the final orders, the tribunal can make ancillary provisions for a merger or amalgamation, or other required matters.

NOTE: If any compromise or amalgamation involves a merger or amalgamation, section 230 will apply read with section 232 of The Companies Act, 2013.

Procedure for Merger and Amalgamation of Companies:

  1. Filing of Company Application: An application to be filed in Form NCLT-1 with all the important documents mentioned under Rule 3 of the act, an Affidavit, and the fees prescribes by the rules.

  2. Hearing of Company Application: The tribunal will consider the application and pass an order.

  3. Order of the Tribunal: The tribunal may order a meeting of all the members and creditors of the company to know their opinion on the matter.

  4. Notice of the Meeting: A notice to all the members, creditors, and debenture holders, SEBI, Stock Exchange, Newspaper (English and a regional), Central Government, RBI, Income Tax Authority, and competition commission of India will be provided.

  5. Voting at the Meeting: The voting process will be conducted among the members and credits of the company either by physical means or by proxy or by the portal ballet or by electronic means within 1 month.

  6. Objection: Objections can be made within 1 month only by those people who hold a minimum of 10% of the share capital of the company or a minimum of 5% of the outstanding debt.

  7. NCLT's order: A report of the meeting is to be given to NCLT for their final order. NCLT should provide for all the required matters under section 130(7).

  8. Filling of order with ROC: After receiving NCLT's order, the company has to file the order with ROC within 30 days.

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