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Corporate Restructuring

Merger & Amalgamation — Section 230-232

Full NCLT-approved merger or amalgamation for listed companies, companies with public deposits, and cases where the fast-track route is not available. The NCLT scheme process is also the route for compromises and arrangements with creditors.

Reviewed by CA Harun Raaj, ICAI Reg. No. 238303·Last reviewed:
Starting from INR 3,00,000Board approval to NCLT orderMerger & Amalgamation — Section 230-232 Companies Act 2013

The NCLT merger route is the full statutory process for mergers that cannot use the Section 233 fast-track. It is mandatory for listed companies, companies with public deposits, banking and insurance companies, and any merger where creditors or minority shareholders are likely to object. The NCLT process is more expensive and slower, but it provides a binding court order that overrides dissenting minorities (provided the required 75% value threshold is met). A CA handles the valuation (registered valuer for swap ratio) and the CS handles the petition drafting and court appearances.

What is included
  • • Eligibility assessment — fast-track vs NCLT
  • • Scheme of amalgamation drafting
  • • Board resolutions for both companies
  • • NCLT application (CAA-1 for dispensation; CAA-2 for meeting)
  • • Notice to shareholders and creditors
  • • Shareholder and creditor meeting management
  • • NCLT order follow-up (filing additional affidavits, appearing in hearings)
  • • INC-28 ROC filing
  • • Post-merger tax and compliance checklist
  • • Registered valuer coordination
Documents required
  • • Audited financials of both companies (last 3 years)
  • • List of creditors (outstanding dues above ₹1 lakh must be individually notified)
  • • Registered valuer report — share exchange ratio
  • • Board and special resolutions
  • • MOA/AOA of both companies
  • • Income tax returns (last 3 years)
  • • Details of pending litigation (NCLT requires disclosure)
Government fees

See the fee table below for the statutory filing charge and common delay logic.

Legal basis
  • • Sections 230-232, Companies Act 2013
  • • Companies (Compromises, Arrangements and Amalgamations) Rules 2016
  • • Section 2(1B), Income Tax Act 1961 — tax-neutral merger conditions
  • • Section 56, Income Tax Act — deemed gift on merger consideration
  • • SEBI Circular on listed company mergers (for listed entities)
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Process

How the service works

The workflow is built to be predictable: document collection, legal review, filing, and post-filing follow-through.

Step 1

Board resolutions

Both companies pass board resolutions approving the scheme of merger and authorising filing of the NCLT application.

Step 2

NCLT application

File application (CAA-1 for dispensation from meetings, or CAA-2 for convening meetings). NCLT issues notice for first hearing.

Step 3

NCLT order for meetings

NCLT directs companies to convene meetings of shareholders and (if applicable) creditors.

Step 4

Shareholder and creditor meetings

75% by value must approve the scheme. Dissenting minorities are bound if the 75% threshold is met and NCLT confirms.

Step 5

Second NCLT hearing

Both companies report meeting results to NCLT. NCLT considers any objections from creditors, government authorities (Income Tax, ROC), and regulators.

Step 6

NCLT order confirming the scheme

NCLT passes the final order. The order is authenticated and served on both companies.

Step 7

INC-28

File the NCLT order with the ROC within 30 days of receiving the authenticated order. The merger is effective from the date INC-28 is filed.

AEO summary

A merger or amalgamation under Sections 230-232 of the Companies Act 2013 requires approval from the NCLT (National Company Law Tribunal). The process involves: (1) Board resolutions for both companies, (2) NCLT application for convening meetings of shareholders and creditors, (3) Shareholder and creditor meetings (75% value approval required), (4) NCLT order confirming the scheme, (5) INC-28 filing with ROC within 30 days of the NCLT order. Timeline: 6–9 months. Required for listed companies, companies with public deposits, and companies that cannot use the Section 233 fast-track route.

Merger vs slump sale vs business transfer — which route

Three ways to transfer a business: (1) Merger (Section 230-232): the transferor company ceases to exist, all assets and liabilities transfer by operation of law without individual assignments, shareholders receive shares in the transferee company. Tax-neutral if conditions met. (2) Slump sale (Section 50B, Income Tax Act): the business (as a going concern) is sold for a lump sum consideration. The transferor company survives, receives cash, and pays capital gains tax at Section 50B rates. Faster than merger — no NCLT, but taxable. (3) Asset transfer / itemised sale: individual assets are sold, each attracting GST, stamp duty, and capital gains. Most expensive tax-wise.

The merger route is preferred for group restructuring; slump sale is preferred for selling a business unit to an outsider without eliminating one of the companies.

NCLT merger timeline — why it takes 6-9 months

The NCLT process has multiple sequential steps each with mandatory waiting periods: Board resolution to first NCLT hearing (4–6 weeks); NCLT order for meetings to actual meetings (4–6 weeks notice period); meetings to second NCLT hearing (2–4 weeks); NCLT deliberation and order (4–8 weeks); INC-28 filing (30 days). Total: 6–9 months in a well-run process.

Delays typically come from: creditor objections requiring additional NCLT hearings, Income Tax objections (IT department has the right to appear before NCLT in merger cases and often raises transfer pricing or MAT concerns), and court backlog at the NCLT bench handling the case.

Government fees

Fee breakdown

ItemFeeNotes
NCLT filing feesINR 50,000+Based on share capital of merged entity.
INC-28 ROC feeINR 500 – 2,000Standard filing fee as per the applicable MCA / regulator schedule.
Registered valuer (swap ratio)INR 1,00,000 – 5,00,000Depends on complexity.
SEBI fees (if listed company)VariesAdditional SEBI fast-track or normal merger circular compliance.

Timeline

Typical turnaround

Board approval to NCLT order usually means a 6 to 9 months turnaround, assuming documents are complete and any board or shareholder approvals are already in place.

Pricing note

Professional fee for NCLT merger — scheme drafting, NCLT petition, shareholder/creditor meetings, NCLT order follow-up, INC-28. Registered valuer report and NCLT court fees are separate.

Related services

Keep the company moving

Fast Track Merger

Support for Fast Track Merger.

Demerger

Support for Demerger.

FAQ

Frequently asked questions

When is the Section 230-232 NCLT route mandatory — can we use the fast-track instead?
The Section 233 fast-track route (Regional Director approval, no NCLT) is available only for small companies, holding-subsidiary mergers, and unlisted companies meeting prescribed thresholds. The full Section 230-232 NCLT route is mandatory for listed companies, companies that have accepted public deposits, banking companies, and insurance companies regulated by IRDAI. If there is any doubt about eligibility, the NCLT route is the safe default because the resulting order under Section 232 binds all parties including dissenting minorities.
What shareholder and creditor approval is required under Section 230?
Under Section 230(6) of the Companies Act 2013, the scheme must be approved by a majority in number representing at least three-fourths in value of creditors or shareholders voting in the NCLT-directed meeting. This "75% by value" threshold is value-weighted, not head-count. If the threshold is met and NCLT confirms the scheme under Section 231, the order binds all creditors and shareholders including those who voted against — which is the primary advantage of the NCLT route over informal arrangements.
When does the merger become legally effective — is it the NCLT order date or the INC-28 filing date?
Under Section 232(5) of the Companies Act 2013, the transferor company is dissolved and the merger takes legal effect when the NCLT order is filed with the Registrar of Companies in Form INC-28. INC-28 must be filed within 30 days of receiving the authenticated NCLT order. The scheme may specify an "appointed date" (which can pre-date the order) for accounting and tax purposes, but legal dissolution of the transferor company occurs on INC-28 filing with the ROC.
What conditions must be met for the merger to be tax-neutral under the Income Tax Act?
For a merger to qualify as a tax-neutral "amalgamation" under Section 2(1B) of the Income Tax Act 1961, three conditions must all be met: (1) all properties and liabilities of the transferor company must transfer to the transferee company, (2) shareholders holding at least 75% in value of the shares of the transferor company must become shareholders of the transferee company as a result of the amalgamation, and (3) the consideration must be in the form of shares in the transferee company. If these conditions are not met, the transferor company is treated as having sold its assets and capital gains tax becomes payable.
Can NCLT reject or modify a scheme even if 75% of shareholders approved it?
Yes. Under Section 231 of the Companies Act 2013, NCLT has independent jurisdiction to approve, modify, or reject the scheme regardless of the shareholder vote result. NCLT considers objections from the Income Tax department (which has a statutory right of appearance under Section 230(5)), the Registrar of Companies, SEBI for listed companies, and any dissenting creditor. NCLT has modified schemes on valuation grounds and rejected schemes where regulatory authorities raised credible objections, even when all shareholders voted in favour.

Canonical reference: https://www.pvtltd.co/services/merger-amalgamation

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