Section 233 of the Companies Act, 2013 read with Rule 25 of

The Companies (Compromises, Arrangements and Amalgamations)

Rules, 2016 came into force w.e.f. 15th December 2016.It provides the
concept of simplified merger. Under Companies Act, 1956 all the
mergers and restructurings had to go through with lengthy proceedings,
intervention of High Court was mandated thus making the process very
time consuming. The Fast Track merger covered under section 233
of Companies Act, 2013 requires the approval from Shareholders,
creditors, Registrar of Companies, Official Liquidator and Regional
Director. Under the fast track merger scheme of merger shall be entered
between the following types of Companies.
Companies between which fast track merger scheme can be entered
Page Contents
 Companies between which fast track merger scheme can be entered
o 1. Holding Company and its wholly owned subsidiary company-
o 2. Merger between two or more small companies
o 3. Such Other class or classes of companies as may be prescribed.
 Benefits of Fast Track Merger
 Drafting of Scheme of Merger
 Procedure of Fast Track Merger
 Effect of Registration of scheme
 Pooling of the Authorized Share Capital
 Additional Documents required by Regional Director
 FAQs on Fast Track Merger U/s 233 of Companies Act, 2013
 Overview of Fast Track Merger
 Forms in Brief related to Fast Track Merger
 E-Forms related to Fast Track Merger under Companies Act, 2013

1. Holding Company and its wholly owned

subsidiary company-
Holding and Wholly Owned Subsidiary company can be public or private
company or it may be section 8 Companies. Further If Holding Company
desires to merger with more than one of its wholly owned subsidiary, it
has to make more than one application.
2. Merger between two or more small companies
As per section 2(85) of Companies Act, 2013 small company” means a
company, other than a public company, paid-up share capital of which
does not exceed fifty lakh rupees or such higher amount as may be
prescribed which shall not be more than 10 (ten crore rupees).

3. Such Other class or classes of companies as

may be prescribed.
The Rules under Companies (Compromises, Arrangements and
Amalgamation) Rules 2016 have been enforced from 15.12.2016, but
these do not define the other prescribed class or classes of companies.
Benefits of Fast Track Merger
1. No Mandatory approval of NCLT required.
2. No Need of Issuing Public Advertisement.
3. No Court Convened Meeting.
4. Less Administrative Burden.
5. Series of Hearing may be avoided.
6. Registration of scheme shall deemed to have effect of dissolution of
transferor companies without the process of winding up.
7. Comparatively less cost.
Drafting of Scheme of Merger
The scheme may generally be divided into 4 parts as follows
1. Preamble
2. PART-A
(i) definitions
(ii) Pre & Post merger share capital
3. PART- B
 (i) Transfer and vesting of the assets and liabilities.
(ii)Appointed / Operative date of the scheme.
(iii)Treatment of the scheme in terms of accounts, tax and
dividend.
(iv)Company staff, workmen and employees their benefits.
(v)Cancellation of the shares of the transferor company – wholly
owned subsidiary.
(vi)Consolidation of Authorized Share Capital.
(vii)Dissolution without winding up.
4. PART -C
(i)Notice of approval of the scheme of merger.
(ii)Modification/amendments to the scheme.
Procedure of Fast Track Merger
1. Both the Transferor and Transferee Company shall be authorized by
their Articles of Association for merger. If Not they need to alter their
Articles of Association.Merger shall be permissible as per the Object
Clause of Memorandum of Association of both the Companies.
2. 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.
3. Submission of Notice inviting Objections or Suggestions
Both the transferor and transferee companies shall file the draft scheme
proposing the merger with the
(i) ROC where the registered office of respective companies are situated
and
(ii)Official Liquidator
 (iii) or persons affected by the scheme
in Form CAA-9 to invite objections or suggestions from them.
Note. The notice inviting objection from ROCs in Form CAA 9 is to
be filed in E-Form GNL-1.
The Objections and Suggestions shall be sent by the Registrar and
Official Liquidator and person affected by the scheme to the Regional
Director and to companies involved in merger within 30 days from date
of notice.
4. Filing Declaration of Solvency
Pursuant to the provision of section 233(1)(C ) of Companies act, 2013
read with Rule 25(2) of The Companies(Compromises, Arrangements
and Amalgamation) Rules, 2016, each companies involved in the merger
shall file their respective declaration of solvency statement in Form CAA-
10 with ROC. The Fees for filing the afore stated declaration shall be as
provided under Companies (Registration Offices and Fees) Rules, 2014.
Note. The Declaration of Solvency in Form CAA 10 is be to filed
with the ROC in Form GNL-2.
5. Convening General Meeting of Members or Class of Members
Pursuant to the provisions of section 233(1)(b) of the Act read with rule
25(3), both the companies shall obtain approval of members holding at
least 90% of total no. of shares for the scheme. The Objections and
suggestion received by ROC and OL shall also be considered by the
companies in their respective general meeting.
6.Convening Meeting of Creditors or Class of Creditors
Pursuant to the provision of section 233(1)(d) of Act read with rule
25(3),the companies shall obtain the approval of their creditors in any of
the below mentioned manner
(i) By Meeting: Such scheme shall also be approved by the majority
representing 9/10th value of creditors or class of creditors of the
respective companies.
(ii)Without Meeting: Such scheme shall also be approved in writing by
the majority representing 9/10th value of creditors or class of creditors of
the respective companies.
Note. Notice of the Shareholders or Creditors shall be given 21 clear
days before commencement of respective meetings and notice shall be
accompanies by
(i) Copy of proposed scheme
(ii) Explanatory statement as per Rule 6 (3) of The Companies
(Compromises, Arrangements and Amalgamations) rules, 2016.
(iii) Copy of Declaration of Solvency, etc
Note. Both the Transferor and Transferee Companies shall file the
special resolution as approved by the members and creditors in E
Form MGT-14 with the ROC
7. Filing Copy of Scheme and Results of Meeting with Regional
Director
Pursuant to the provisions of Rule 25(4), the transferee company, within
7 days of conclusion of meeting of members or class of members or
creditors or class of creditors shall require to file with Regional Director
in Form CAA11 the following documents
(i)Copy of scheme as agreed to by members and creditors and
(ii)Report of Results of each of the meetings.
Copy of Scheme along with the above mentioned form CAA-11 shall
also be filed by transferee company with:
(i)The ROC in Form GNL-1 along with the prescribed fees Companies
(Registration Offices and Fees)Rules, 2014 and
(ii)The Official Liquidator through hand delivery or by registered post or
speed post.
Note. Report of meeting in Form CAA 11 is to be filed with the
Regional Director in E Form RD-1.
8. Approval of Scheme by the Regional Director
Registrar of Companies and Official Liquidator may give objections or
suggestions if any to the Regional director within 30 days of the receipt
of the scheme. However where no objections or suggestions have been
made, it shall be presumed that they have no objection to the scheme.
Where no objections or suggestions to the scheme are received from
Registrar of Companies and Official Liquidator and Regional director is
in opinion that scheme is in public interest or in the interest of creditors,
the RD shall issue confirmation order in Form CAA12 which shall be
deemed to be the order sanction the scheme of merger.
On the basis of Objections or suggestions made by ROC and OL or
otherwise, RD is of opinion that scheme is not in public interest, it may
file application before Tribunal in Form CAA-13 within 60 days of receipt
of the scheme and requesting Tribunal may consider the scheme under
section 232 of the Act.
The Order of RD approving the scheme shall be filed in E Form INC-28
with the ROC within 30days having jurisdiction over the transferee and
transferor company.
Note. Form CAA9 and Form CAA10 and Form CAA11 are given
under chapter XV The Companies (Compromises, Arrangements
and Amalgamations) Rules, 2016.
Effect of Registration of scheme
The Confirmation Order filed in Form INC 28 shall be deemed to have
the effect of dissolution of the transferor company without the process of
winding up. Effects of Registration of scheme:
1. Transferor of Properties or liabilities of the transferor company to the
transferee company.
2. The charges, if any on the property of the transferor company shall be
applicable and enforceable as if charges were on the property of the
transferee company.
3. Legal proceedings by or against the transferor company pending
before any court of law shall be continued by or against the transferee
company.
4. On merger share capital held by the transferee company in the
transferor company would have to be cancelled and cannot be allotted to
any trust either on its behalf or on behalf of any of its subsidiary or
associate company.
Pooling of the Authorized Share Capital
Fee, if any paid by the transferor company on its authorized capital prior
to its merger with the transferee company shall be set off against the
fees payable by the transferee company on its authorized capital
enhanced by the merger.
Transferee Company shall follow same steps as provided under section
61 of the Companies Act 2013 for increase of the authorized share
capital.
Additional Documents required by Regional Director
1. Certified Copy of list of Directors, shareholders and creditors of both
the transferor and transferee companies.
2. Verified Facts regarding the subject companies having relationship of
Holding and Wholly owned subsidiary company.
3. Shareholding Pattern of pre and post-merger of Transferee Company.
4. Audited Financial Statements and Directors’ reports of both the
transferor and transferee companies for preceding three years.
5. Memorandum and Articles of Association of both the companies
containing a clause empowering merger and amalgamation.
6. Details of Related Party Transactions entered into by both the
companies.
7. Undertaking from the directors of the Transferee company that no
employees shall be adversely affected and accounting policies will not
be altered.
8. A Certificate issued by Auditor of the Company to the effect that
accounting treatment, if any, proposed in the scheme of merger is in
conformity with the Accounting Standards prescribed under section 133
of the Companies Act, 2013.
9. Proof that the Authorized capital of the Transferee company is
sufficient to allot shares to the shareholders of the Transferor Company.
(a)Present Paid up Share Capital of the Company
(b)Cross Holdings to be cancelled.
(c)Remaining paid up Capital of the Company
(d)Amount of shares to be allotted to the members of the Transferor
Companies by the Transferee Company.
(e)Consolidated Statement of Authorized Capital and Paid up capital of
Transferee Company after issuing shares to the members of Transferor
Company.
FAQs on Fast Track Merger U/s 233 of Companies Act, 2013

1. What is the Wholly Owned Subsidiary Company?

It means a subsidiary company whose 100% shares are held by its
holding company.
The Transferor company needs to be an wholly owned subsidiary of the
holding company as on appointed date of the scheme.
2. Is Declaration of Solvency required from the Transferor
Company?
Section 233 of Companies Act prescribes that it is to be given by both
companies
3. What is the Appointed Date?
Appointed Date means the date from which the scheme shall come into
force (specified in the scheme of merger).
4. What is Effective Date?
Effective Date means the date when the amalgamation/merger is
completed in all respects and the order has been filed with the Registrar
of Companies.
5.How Does the ROC determine the exact date of a company
becoming a wholly owned subsidiary of another company?
A company can become a Wholly owned subsidiary through allotment of
shares or through transfer of shares.
6.What proofs need to be submitted to prove the holding and
Wholly owned subsidiary relationship?
Filing of Forms MGT-4, MGT-5 and MGT-6.
7.Can General Meeting of Members or Creditors be waive?
No waiver for conducting a general meeting for approval of the scheme
of amalgamation
8.Is there scope for amalgamating more than 2 companies in one
scheme?
No scope for amalgamating more than 2 companies in 1 scheme.
9. Whether Listed Companies can also opt for the Fast Track
Merger?
Yes, Listed Companies that fulfils the criteria as mentioned in section
233(1) can also opt for Fast track mode.
10. Can Class of Companies eligible to opt for Fast track merger,
adopt traditional merger route for approval of merger?
Yes class of companies eligible to opt for Fast track merger may at its
own discretion opt for traditional merger route as per provisions of
section 233(14) of the Act and Rule 25(8) of Companies Rule.
11. Can the appointed date of the scheme be changed after filing of
CAA 11?
It may be changed through an affidavit from the directors of the
Company, if allowed by the RD.
12. Can Regional Director suggest changes in the scheme of
merger?
RD cannot suggest changes in the scheme, this can be done by ROC
and OL alone.
The wording used in the rules say “Confirmation Order”
If the shareholders, creditors, ROC, OL do not have any objection to the
scheme, then the RD has to simply “Confirm” the scheme.
13. How the documents and Forms to be provided to the Official
Liquidator?
Documents and Forms to be provided to Official Liquidator to through
hand delivery or by post.
14. Is there any scope for Demerger?
Section 233 of the Companies Act, 2013 uses the words notwithstanding
anything contained in Section 230 and 232 of Companies Act, 2013.
Section 233 (12) gives a reference of the section being applicable to in
respect of a scheme of compromise and arrangement or division or
transfer of a company.
15. Is Stamp Duty applicable on Fast Track Merger?
Stamp Duty is a state subject and its applicability is determined on two
grounds
(a) State where Registered office of the company is situated
(b) Status of properties being transferred under the scheme.
Further it is only where property is involved and when transferee intends
to transfer the same in its name comes the question of registration and
therefore, payment of duty rises at that stage. In Case where a property
may not be situated in the state of passing of order on merger, the stamp
schedule of relevant State has to be seen if duty is applicable on
immovable property registration in that state where property is located.
Overview of Fast Track Merger

S. Steps Forms to be filed

No.

1. Check whether the Transferor and Transferee

company authorized by Articles of Association
of the Company.
 Check MOA of both the companies- Merger is
permissible as per object clause of MOA of
both the companies.

2. Appointed Date to be decided by Board of

Directors on mutual consent.

3. Drafting the scheme of Merger.

4. Both the transferor and transferee

companies shall send notice of Board
Meeting (at least 7 days before the date of
board meeting).

5. Both the transferor and transferee

companies shall Conduct their respective
Board Meeting
1. To Consider Scheme of Merger.
2. To authorize someone to do all acts and
things as may be considered necessary and
expedient in relation thereto.

6. Both the Transferor and Transferee · E Form GNL-1 to be filed

companies shall file Notice of proposed with ROC for filing form CAA-
scheme in Form CAA-9 with Registrar, OL or 9 along with draft scheme of
person affected by the scheme to invite their merger.(Both the companies)
objections & suggestions. · Form CAA-9 along with
(Receipt of Objections & suggestions if any draft scheme of merger to be
from registrar, Official Liquidator or person given to OL through hand
affected by the scheme within 30 days from delivery or by post.( Both the
date of filing the notice) companies)

7. Both the transferor and transferee companies · E- Form GNL-2 to be filed

shall file Declaration of solvency in Form with ROC for filing Form CAA-
CAA-10 with ROC 9 ( Both the companies)

8. Both the transferor and transferee companies

shall Dispatch the Notice of members and
creditors meeting (at least 21 clear days
before the meeting. Notice shall be
accompanied with
1. Scheme of merger
 2. Declaration of solvency.
3. Explanatory Statement as per Rule 6 (3) of
The Companies (Compromises,
Arrangements and Amalgamations) rules,
2016

9. Both the transferor and transferee E Form MGT-14 to be filed

companies shall hold the General Meeting of with ROC within 30 days of
the members and creditors to consider: passing of special resolution.
1. To get the scheme of merger approved by (Both the companies).
the members and creditors.
2. To Consider the suggestions received by
ROC, OL, if any

10. Transferee Company shall file copy of 1. E Form RD-1 to be filed for
scheme so approved by members and filing form CAA-11 with
creditors along with report of results of each RD.(Transferee company)
meeting in Form CAA11 with 2. Form CAA11 to be
1. Regional Director provided to Official Liquidator
2. Official Liquidator through hand delivery or by
post.(Transferee company)

11 Regional Director shall issue a confirmation

order in FORM CAA 12 for approval of the
scheme, if no objections from Registrar or
Official Liquidator received).
Provided where objections or suggestions is
received from Registrar or Official Liquidator,
RD may file application before Tribunal in
Form CAA-13 within 60 days of receipt of the
scheme and requesting Tribunal may
consider the scheme under section 232 of the
Ac

12. The Confirmation Order of the Regional E Form INC-28 has to be filed
Director shall be filed with the ROC by within 30 of receipt of the
transferor and transferee companies along order of confirmation.(Both
with the prescribed fees. the Companies).

Forms in Brief related to Fast Track Merger

S. No. Form No. By Provisions Particulars

1. CAA 9 Transferor & Transferee Sec 233(1)(a) Notice of

Company r/w 25(1) scheme
inviting
objections &
suggestions
from
competent
authorities.

2. CAA10 Transferor & Transferee Sec 233(1)(c) Declaration of

Company r/w 25(2) solvency by
the transferor
& transferee
company.

3. CAA11 Transferee Company Sec 233(2) r/w Filing scheme

25(4)(A) of merger
approved by
the members
and creditors
with RD(within
7 days of
approval of
members and
creditors)

4. CAA 12 Regional Director Sec 233 Confirmation

r/w25(2) order for the
scheme of
Merger by the
RD.