Merger & Amalgamation

Governed by Sections 230-232, Companies Act 2013, and the Companies (Compromises, Arrangements and Amalgamations) Rules 2016. Process: Board approval of a draft scheme and an independent valuation report; application to the NCLT (Form NCLT-1) for directions on convening meetings of creditors and/or members; NCLT-ordered meetings requiring approval by a majority in number representing three-fourths in value of those voting; notice of the scheme to the Registrar of Companies, the Official Liquidator, and sectoral regulators (RBI, SEBI, IRDAI, Income-tax authorities, as applicable) with a 30-day window to raise objections; and a final NCLT sanction order, which must be filed with the Registrar in Form INC-28 within 30 days. On sanction, the transferor company's undertaking vests in the transferee and the transferor is dissolved without a separate winding-up process. Cross-border mergers — an Indian company merging with a foreign company incorporated in a jurisdiction notified under Section 234 — additionally require prior RBI approval under FEMA before the Section 230-232 process is followed.

Merger and amalgamation is the combination of two or more companies into one under the Companies Act 2013 and the Income-tax Act 1961 — the scheme of amalgamation approved by the members and the creditors and sanctioned by the NCLT under Sections 230 to 232 of the Companies Act, with the transferor's assets and liabilities vesting in the transferee and the shareholders receiving the consideration. The tax treatment follows the conditions of Section 2(1B) of the Income-tax Act for the amalgamation — the continuity of the business, the vesting of the assets and the liabilities, and the consideration in the shares — with the rollover relief of Section 47(v) so that the amalgamation is not itself a taxable transfer.

The amalgamation is the consolidation of two businesses into one — the merger of the group companies, the combination with the competitor, the restructuring that the business needs — and it is a transaction of approvals: the scheme, the valuations, the reports of the auditors and the valuers, the members' and the creditors' meetings, the NCLT sanction, and the filings after the sanction. The tax position is decided by the conditions: the amalgamation that meets Section 2(1B) and Section 47(v) carries no capital gains; the one that does not meets the tax of a transfer.

The cost of a broken amalgamation is the double cost: the scheme that the NCLT refuses and the process that restarts, the amalgamation that misses the Section 2(1B) conditions and the capital gains that follow, the creditors' objections that were never planned. The amalgamation is the transaction where the legal and the tax engineering must work together.

This service is for companies and groups merging. We design the scheme of amalgamation under Sections 230 to 232, prepare the valuations, the reports and the applications, manage the members' and the creditors' approvals and the NCLT sanction, structure the tax treatment under Section 2(1B) and Section 47(v) of the Income-tax Act, and complete the post-sanction filings so the amalgamation is completed cleanly.