Fast Track Merger

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Contact for Fast Track Merger

What is Fast Track Merger?

Merger/Amalgamation is a restructuring tool which helps Companies in expansion & diversification of their business and to achieve their underlying objectives. 

Merger means an arrangement whereby one or more existing companies merge their identity into another to form a new & different identity.

Section 233 of Companies Act, 2013 has introduced a new concept of fast track merger for Small Companies and merger of Holding companies with its wholly owned Subsidiary Companies. This is the first significant change to merger and amalgamations regime over the last six decades which has sub-served the need of simplification of procedure.

Fast Track Merger is a new concept which is introduced in India under the Companies Act, 2013. Moreover, fast Track Merger is a unique concept as it does not require approval from National Company Law Tribunal (NCLT) for the merger. Hence, approval by jurisdictional Regional Directors based on the reports by the Registrar of Companies (ROC) and Official Liquidator is sufficient.

PROCEDURE OF FAST TRACK MERGER

Step 1: Check Articles of Association

First, both the transferor and transferee company need to check if their AOA permits for the merger or not. In case AOA does not allow, then it must be altered first.

Step 2: Prepare a draft Scheme

Both the companies need to prepare a draft scheme for merger. Also, they must evaluate the exchange ratio based on the valuation provided by at least two professionals.

Step 3: Conducting Board Meeting for Approval of Scheme

Under this process, Both the transferor and transferee company shall hold the Board Meeting for approving the draft scheme of merger. Further necessary resolution will be passed in the respective board meeting of each company to authorize someone to do all acts and things as may be considered necessary and expedient in relation thereto.

Step 4: Issue Notice of Proposed Scheme

Issue notice of the proposed scheme inviting objections/suggestions, from jurisdictional Registrar of Companies (ROC) and to the persons affected by the scheme within 30 days. also, Each company needs to file their respective Declaration of Solvency Statement (Form CAA-10) with the ROC.

The notice for the meeting must be sent before 21 clear days to the members. It must state the copy of proposed scheme, a statement disclosing details of the merger, copy of the latest audited financial statement, valuation report.

Step 5: Approval from Creditors

Obtain written authorization from creditors by conducting a Creditors Meeting.

Step 6: Permission from Members

Obtain consent from the members at a general meeting who holds at least 90% of the total number of shares of the company.

Step 7: Filing of the draft scheme

A draft of the scheme involving merger must be filed within seven days of the conclusion of the meeting with creditors and members. Moreover, a copy of the scheme must be filed with the Regional Director (R.D.) having jurisdiction of the transferee company. Further, provide the scheme to ROC in form GNL-1 and official liquidator through speed post or registered post.

Step 8: Approval of scheme by Regional Director

In case the official liquidator has no issue with the filed scheme, then he will take notice of the same and will issue a confirmation to the companies that are involved in the merger. But, in case the ROC has any objections, the same will be communicated to the regional director in writing. Also, the communication should be done within 30 days if the same is not done within 30 days it will be presumed that ROC has no objection about the scheme.

Step 9: Filing of Approved Scheme

The order of the Regional Director must be filed in Form INC-28 with the ROC within 30 days.

Get a free consultation for Fast Track Merger by scheduling an appointment with Legal Time.

Benefits

No Mandatory approval of NCLT required.

No Need of Issuing Public Advertisement.

No Court Convened Meeting.

Less Administrative Burden

Series of Hearing may be avoided

Registration of scheme shall deemed to have effect of dissolution of transferor companies without the process of winding up.

Comparatively less cost.

Get a free consultation for Fast Track Merger by scheduling an appointment with Legal Time.

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